THE BUSINESS PAPERS RULE: PERSONAL PRIVACY AND
WHITE COLLAR CRIME
by
JOHN
S.
APPLEGATE*
INTRODUCTION
W
has recently been the focus of much attention by law
enforcement agencies and legal commentators. One reason for this
interest is the substantial increase in this kind of criminal activity and the
staggering costs it imposes on society.' Significantly, because white collar crime
uses the institutions and techniques of legitimate financial and commercial
activities, it is extremely difficult to initially detect, investigate, and prosecute
such crime. 2
HITE COLLAR CRIME
Successful enforcement often necessitates the use of large amounts of
personal financial information.3 Prosecution for bank robbery does not require
the financial records of the bank, but prosecution for embezzlement may require
those records and also the records of all bank employees and customers who
may be involved in the embezzlement. However, because it is considered very
private this information is, or ought to be, very difficult to obtain. This creates
a major dilemma in formulating a comprehensive policy for combatting white
collar crime. A full commitment to either privacy goals or law enforcement
goals could seriously compromise the other.
The legal site of this conflict between competing goals has been the
constitutional protections of privacy in criminal matters, the fourth and fifth
amendments. Where law enforcement goals were given primacy, as in the recent
bank records cases," disturbing questions about the future of personal privacy
were raised. On the other hand, it is not reasonable to sacrifice law enforcement
goals on the basis of notions of privacy derived from application of the fourth
*Law Clerk to Judge Edward S. Smith, United States Court of Appeals for the Federal Circuit. B.A.,
Haverford College, 1978; J.D., magna cum laude, Harvard Law School, 1981. The author wishes to express
his gratitude to Dean James Vorenberg of the Harvard Law School for his advice and encouragement.
'See generally H. EDELHERTZ, E. STOTLAND, M. WALSH & M. WEINBERG, THE INVESTIGATION OF WHITECOLLAR CRIME: A MANUAL FOR LAW ENFORCEMENT AGENCIES 10-18 (1977) [hereinafter cited as
INVESTIGATION MANUAL]; U.S. DEPARTMENT OF JUSTICE, NATIONAL PRIORITIES FOR THE INVESTIGATION AND
(1980) [hereinafter cited as JUSTICE DEPT. REPORT].
'See generally INVESTIGATION MANUAL, supra note 1; Duke, Prosecutionsfor Attempts to Evade Income
Tax: A Discordant View of a Procedural Hybrid, 76 YALE L.J. 1, 8-54 (1966); Wilson & Matz, Obtaining
Evidence for Federal Economic Crime Prosecutions:An Overview andAnalysis of Investigative Methods,
PROSECUTION OF WHITE COLLAR CRIME
14 AM. CRIM. L. REV. 651 (1977).
'See Wilson & Matz, supra note 2, at 651.
'California Bankers Ass'n v. Schultz, 416 U.S. 21 (1974); United States v. Miller, 425 U.S. 435 (1976)
(bank records are not protected by the fourth amendment).
[1891
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amendment to more traditional criminal acts. This problem can be satisfactorily
resolved only by a broad, coherent scheme of accommodation between privacy
and law enforcement needs, recognizing the unique problems raised by white
collar crime.
Constructing such a scheme will require more than a simple suggestion
for judicial interpretation of a constitutional provision. White collar crime cannot
be treated like any other crime. Privacy rights may be expended in some areas
and limited in others. While current doctrines must be taken into account if
the solution proposed here is to be realistic, the thrust of this article will be
an analysis of the problems presented by white collar crime and of various
approaches to its solution. The "business papers rule" proposed here is presented
as both a basis for discussion of how to formulate an approach to white collar
crime and as one possible overall approach.
The first step in this endeavor will be the development of a definition of
white collar crime which adequately accounts for the difficulty in combatting
it. The next step will be to examine individually the two competing goals law enforcement and privacy - to try to get a sense of the requirements of
each. This will lead into a discussion of the conflict between the goals. The
article will then move on to consider several unsatisfactory resolutions of the
conflict, making that the basis for sketching out the necessary specifications
of a good solution. Finally, the "business papers rule" will be proposed and
analyzed, for the purpose not only of responding to the problems raised in the
first part of the article, but also of describing an analytical approach to white
collar crime enforcement policies. The article will conclude with a discussion
of the stability of this suggested approach to white collar crime.
I. A
GENERAL DEFINITION OF WHITE COLLAR CRIME
The law enforcement problem presented by white collar crime can be illustrated by an examination of four different crimes: bankruptcy fraud; government contracting bribery; bank enbezzlement; and personal income tax evasion.
The four do not exhaust the range of white collar crime nor are they exhaustively
analyzed.' Their differences, however, demonstrate the wide variety of economic
crimes possible, and their similarities provide the basis for a workable definition of white collar crime.
Bankruptcy fraud usually consists of a bankruptcy planned to follow the
hiding of assets and merchandise and the obtaining of large amounts of credit
using false or incomplete records." A great deal of documentary evidence is
'For a more exhaustive list of white collar crimes, see INVESTIGATION MANUAL, supra note 1, at 277-313.
The few crimes listed there which do not fit into the definition presented herein may be excluded from
present consideration. For some other useful categorizations, see HOUSE COMM. ON THE JUDICIARY, 95th
CONG., 2d SESS., WHITE COLLAR CRIME: THE PROBLEM AND THE FEDERAL RESPONSE 1-7 (Comm. Print 1978)
[hereinafter cited as Comm. Print No. 16]; R. HAGEN, THE INTELLIGENCE PROCESS IN WHITE-COLLAR CRIME
INVESTIGATION 27 (1979); M. Moore, Notes Towards a National Strategy to Deal with White Collar Crime
(1979) (unpublished paper, available in Harvard School of Government Library).
'See Hoover, Investigation of Fraudulent Bankruptcies by the FBI. 32 N.Y. PUB. ACCT. 187 (1962).
Fall, 19821
BUSINESS PAPERS RULE
necessary even to determine that fraud exists. Once the investigators are
reasonably certain that something is amiss, the merchandise and assets must
be traced through financial records, many of which will be those of other persons who may or may not be involved in any criminal activity. The illegal purpose must usually be proven by indirect evidence, that is, the records must be
used to show that the bankruptcy was planned. And even if all the necessary
books and records and merchandise are obtained, the analysis of this material
is a very complex and time-consuming process.
Contracting bribery creates its own difficulties. The most significant aspect
of bribery is that it is self-contained, involving governmental institutions only
as unknowing victims.7 It is different from extortion in that there is no one
with any incentive to report the crime.8 The victim is ignorant of the crime and
the culpable participants all have too much to gain. Another major law enforcement problem is that bribery transactions are almost always conducted in cash.
Massive surveillance, confessions, or grants of immunity are often necessary.9
But in all cases the basic law enforcement need is to explore in minute detail
the finances of the companies and persons suspected of making and accepting
the bribes. The recent investigation of corruption in the awarding of contracts
for state and county buildings in Massachusetts provides an excellent picture
of the problems of discovering, investigating, and proving bribery.'" The
Massachusetts Special Commission had both to discover the pertinent cash transactions and then to tie them to the company's funds. This required huge amounts
of data - all of the records of a suspected company for the relevant time period
were summoned - and a computer to analyze it. "
Self-dealing or embezzlement by a bank officer is similar to bankruptcy
fraud in that records of many persons and entities are required simply to
determine initially whether any questionable connections or interests exist.
However, in an embezzlement investigation, unlike most bankruptcy cases, personal bank accounts will be important in determining who is embezzling and
where the money is going. With planned bankruptcy investigators know whose
'M. Moore, supra note 5, at 31. Moore provides a very helpful analysis of the characteristics of various
types of white collar crime.
'Id. at 31.
'See Ogren, The Ineffectiveness of the CriminalSanction: Losing the Battle Against White Collar Crime,
11 AM. CRIM. L. REV. 959 (1973). The recent controversy over the Abscam investigation demonstrates the
lengths to which law enforcement agencies feel compelled to go to counter this self-contained crime. In
Abscam, the Government was forced, in effect, to create the crime in order to stop it. See United States
v. Kelly, 539 F. Supp. 363 (D.D.C. 1982).
"COMMONWEALTH OF MASSACHUSET-IS, SPECIAL COMMISSION CONCERNING STATE AND COUNTY BUILDINGS,
FINAL REPORT TO THE GENERAL COURT (1980) [hereinafter cited as SPECIAL COMMISSION REPORT]. Volumes
1-5 and 9 are germane to this article. This report is an invaluable account of an actual bribery investigation.
It describes in detail the investigative method and findings of the Special Commission concerning the pervasive
corruption in the awarding of building contracts in Massachusetts. The commission also produced, but
did not have time to publish before its mandate expired, a section of its Report entitled "Investigative
Techniques for Political Corrupation and Other 'White-Collar' Cases." It is still in outline form, but in
scope and testedness it will be very useful if and when it is published. See also R. COHEN & J. WHITECOVER,
A HEARTBEAT AWAY: THE INVESTIGATION AND RESIGNATION OF VICE PRESIDENT SPIRO T. AGNEW (1974).
"9 SPECIAL COMMISSION REPORT, supra note 10, at 78-83.
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personal accounts to review initially, but with embezzlement a much wider net
must be cast at an early stage in the investigation. This represents a substantial
intrusion into privacy, expecially since it involves bank records of individuals.
Personal income tax evasion is the crime involving the most private of personal documents. It is at the opposite end of the spectrum from bankruptcy
fraud, where most of the evidence comes from business records and the
bankrupt's personal finances are voluntarily disclosed because applying for
bankruptcy is a voluntary act. A person's income, deductions, and exemptions
reveal a great deal about a person's private life, and extensive inquiry into these
matters will seriously compromise that privacy. This problem is particularly
acute because of the difficulty of spotting evasion without that extensive inquiry.
All of these crimes have several similarities, different ones of which have
been emphasized by different studies. White collar crime was first identified
as a sociological phenomenon, and beginning with Sutherland's work there has
been a distinct school viewing it as a social rather than a legal concept.' 2 These
sociological definitions concentrate on the socioeconomic fact that white collar
criminals are not part of the traditional "criminal element" at all. While this
is not legally relevant, it points to a key problem in enforcement. White collar
criminals blend in well with the law-abiding pillars of the community, and
sometimes are the pillars of the community. So, they are initially less subject
3
to suspicion, and are also the beneficiaries of a certain reluctance to prosecute.
These people are routinely involved in completely legitimate transactions of
the same type that can later be twisted to criminal purposes and so they are
further removed from immediate suspicion.
Another crucial similarity between white collar crimes is that all involve
use of the economic system in general, and financial and public institutions
in particular. The tools of white collar crime - unlike a sawed-off shotgun
or a jimmy - are indistinguishable from those of the millions of legitimate
transactions in the same medium. Filing for bankruptcy, acquiring a government contract, withdrawing money from a bank account, or earning income
are not inherently illegal acts. And the transactions themselves are not discrete,
recognizably criminal acts, like a murder or a burglary, but are ongoing activities
which appear no different from legitimate ones. This obviously makes the crime
difficult to detect. It also means that the primary way in which the illegal transactions differ from legal ones is not in their substance and appearance but in
their purpose and intent. ' The point is that the illegal transactions, like
'White collar crime was originally described as a sociological rather than a legal phenomenon. See E.
SUTHERLAND, WHITE-COLLAR CRIME 9 (1949). There continues a distinct school viewing it as a social rather
than a legal concept. See SUBCOMM. ON CRIME OF THE HOUSE COMM. ON THE JUDICIARY, 95TH CONG., 1ST
SESS., NEW DIRECTIONS FOR FEDERAL INVOLVEMENT IN CRIME CONTROL 64 (Comm. Print 1977) [hereinafter
cited as Comm. Print No. 2]; WHITE-COLLAR CRIME (G. Geis & R. Meier ed. 1977) (a collection of
sociological essays).
"INVESTIGATION MANUAL, supra note 1, at 32. This is related to the tendency for perpetrators not to look
like criminals so there is a certain reluctance to investigate these persons as well as their businesses.
"See H. EDELHERTZ, THE NATURE, IMPACT AND PROSECUTION OF WHITE-COLLAR CRIME 27 (1970). This
is obviously far harder to prove. Ogren, supra note 9, at 969.
Fall, 19821
BUSINESS PAPERS RULE
their perpetrators, blend in with legal ones and so become very difficult to detect.
Presently, the most generally accepted definitions emphasize that deceit
and guile are the basis of white collar crime. The American Bar Association
defines white collar crime as "any non-violent, illegal activity which principally
involves deceit [or] misrepresentation ....,IThe Federal Bureau of Investigation defines it as "non-physical illegal acts associated and accomplished largely
by concealment and deceit ... ."I6 These descriptions are accurate as far as
they go, but they seem to describe symptoms rather than basic elements. In
the same vein, Edelhertz' 7 provides a detailed and very useful list of symptoms.
He identifies five main characteristics: (1) intent and premeditation; (2) disguise
of purpose; (3) reliance on victim's ignorance or carelessness; (4) voluntary victim
and
action; and (5) concealment of violation. Of these, disguise of purpose
8
characteristics.'
crucial
the
as
identified
are
violation
of
concealment
"
Deception and guile are indeed the sine qua non of white collar crime.
This appears in the ability to hide the illegality in apparently legitimate transactions or statements. Non-violence is part of this ability, as is the premeditation inherent in this type of crime. Concealment in fact is the means and end
of the illegal activity, and concealment is aided immensely by the complexity
of the institutions and transactions used. It is misleading to characterize the
victim as unwatchful or voluntarily helping the criminal. "Business as usual"
is the means both of effecting and of disguising the crime. Concealment of
purpose is more than a symptom of the crime, it is the crime. The transactions
do not have a "facade of legitimacy" 9 if that implies that concealment is a
separate, post hoc operation; concealment is the crime.
When the concealment characteristic is considered with the other similarities
noted, the result is a persistent pattern of intermingling legal with illegal,
legitimate with illegitimate. This intermingling is the essence of white collar crime.
It is characteristic of the type of criminal, of the method of committing the
crimes, of the types of crimes committed, and, most importantly, of the primary
difficulty encountered in combating white collar crime. Sorting out the legal
and illegal, when possible, first requires access to large amounts of documentary evidence, and then requires careful evaluation of complex contents of
the documents. This intermingling is also at the root of the important privacy
issues which are raised by a proactive investigation. To sum up, white collar
crime is a pattern of apparently routine economic transactions, which has the
effect of bringing to the perpetrator economic gain to which he or she is not
legally entitled.
'White collar crime is "any non-violent, illegal activity which principally involves deceit [or]
misrepresentation." A.B.A. SECTION OF CRIMINAL JUSTICE. ECONOMIC OFFENSES 17 (1977). See also JUSTICE
DEPT. REPORT, supra note 1,at 5.
'6Webster, The FBI and White Collar Crime Today, 50 N.Y. ST. B.J. 635, 636 (1978).
"INVESTIGATION MANUAL, supra note 1.
"Id. at 21-25.
"Id. at 22.
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II.
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THE DIFFICULTIES AND REQUIREMENTS
OF EFFECTIVE ENFORCEMENT
There are basically three stages in the enforcement process: detection,
investigation, and prosecution. While each stage poses different problems, and
each creates different evidentiary needs, they all share a need for huge amounts
of information, a requirement which is incompatible with traditional views of
personal and corporate privacy.
A. Detection
Because white collar crime uses the same methods as legitimate transactions, because the harm is inapparent, and because the crime often involves
only acts of omission, detection is very difficult."0 Victims, a standard source
of criminal complaints, often do not know that they have been victimized, or
learn about it well after the victimization has been accomplished.2 , The other
usual source of complaints, observation by a third party, is not effective either,
because white collar crime is by its nature concealed and intermingled with
legitimate business activities.
The success of a bankruptcy fraud, a bribe, embezzlement, or tax evasion
is in the concealment. If others were aware of it happening, the crime would
not occur. Thus, in white collar crime there will often not even be the possibility of informers, other than culpable participants.
The law enforcement response to this state of affairs must be some sort
of general intelligence activity. Intelligence is distinguished from investigation
in that it is not related to a specific crime but is instead directed at a group
of persons or transactions which in the past have been associated with illegal
activities.22 This might also include identification of a high-risk area and making
random checks. It is plain that intelligence does not fit into our notions of
a limited and essentially reactive police force." Strategic intelligence requires,
in the absence of distinct criminal acts and victim or third-party observation,
affirmative searches for information.
The amount and different types of information required are large. A major
source, especially from businesses, will be information already in government
hands as the result of regulatory activities.2 ' All kinds of personal information
will be required. 5 Data centers, like those created by credit accounts, will be
2
Comm. Print No. 16, supra note 5, at 29-30.
2
H.EDELHERTZ, supra note 14, at 36-37.
2
INVESTIGATION MANUAL, supranote
1,at 101; THE PRESIDENT'S COMM'N ON LAW
ENFORCEMENT & ADMIN.
199 (1967).
See INVESTIGATION MANUAL, supra note 1, at 14.
2
For example, vehicle registration, real estate transaction records, licenses, civil actions, bank records,
credit information, corporate registers, and membership lists. INVESTIGATION MANUAL, supra note 1, at
117; R. HAGEN, supra note 5, at 4, 6-8.
2
This includes name, address, aliases, description, date of birth, licenses, family, friends, and education.
E. GODFREY & D. HARRIS, BASIC ELEMENTS OF INTELLIGENCE 83-86 (rev. ed. 1978).
OF JUSTICE, COMMISSION REPORT: THE CHALLENGE OF CRIME IN A FREE SOCIETY
23
BUSINESS PAPERS RULE
Fall, 1982]
of great help.26 The mail cover surveillance technique would also be useful."
During the gathering of intelligence, much information of a type which is considered private will be obtained concerning people who have committed no crime.
Nor can the intelligence system be limited to illegal activity. It must include
all information which might be helpful, especially since white collar crime is
concealed within legal activity.2 8
More than the fact of its collection, the analysis methods applied to the
information gathered by intelligence activities conflict with the idea of a limited,
reactive police force. What a broad intelligence system is looking for - what
its computers can find - are patterns, mainly patterns of association.29 The
most common intelligence technique is "link analysis," in which, by means
of charts or graphs, the investigator connects people with other people or groups
by analyzing the number, nature, extent, and duration of contacts between and
among them. 3" This is a powerful technique, yielding a great deal of extremely
valuable information, 3' but also posing a real danger of misuse." Recalling
the crimes illustrated at the outset, it will be noted how much detection depends
on where money is going, and following the money requires checking out
associates. Associates will be found not only through financial data, but also
through surveillance and non-economic documents.
The intelligence methods of the Massachusetts Special Commission on contracting bribery were an extension of link analysis. With a computer the Commission correlated the contracts awarded and adjusted, to whom they were
awarded, who granted them, where they were to be carried out, and when these
events occurred.33 At this early stage, then, the Commission obtained a great
deal of suggestive information about people and on the basis of it, and some
informants, launched a massive investigation of their financial records.3"
Even when used totally in good faith, strategic intelligence violates basic
privacy concepts in three ways. First, the type of information it requires is not
only drawn from public records which are not ordinarily combined, but it is also
material which is generally considered private. Second, the basic analytical tool
"1H. EDELHERTZ, SUpra note 14, at 79; Katzenbach & Tome, Crime DataCenters: The Use of Computers
in Crime Detection and Prevention, 4 COLUM. HuM. RTS. L. REV. 49, 56 (1972).
"INVESTIGATION
MANUAL, supra note 1, at 178. Mail cover surveillance "is the process by which a record
is made of any data appearing on the outside cover of any class of mail matter, including checking the
contents of any second-, third-, or fourth-class mail matter .
39 C.F.R. § 233.2(c)(1) (1981). Such
surveillance is authorized at 39 C.F.R. § 233.2 (1981).
"Draper, Privacy and Police Intelligence Data Banks, 14 HARV. J. ON LEGIS. 1, 10-13 (1976).
"Id. at 3, 15; E. GODFREY & HARRIS, supra note 25, at 94.
"For a detailed discussion of this technique, see E. GODFREY & D. HARRIS, supra note 25, at 124-26; R.
HAGEN, supra note 5, at 10-12.
1'H.R. REP. No. 975, 91st Cong., 2d Sess. 3-4, 16 (1970) (report on the Bank Secrecy Act of 1970).
"See Draper, supra note 28, passim.
"9 SPECIAL COMMISSION REPORT, supra note 10, at 78-83.
Id.
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[Vol. 16:2
is guilt by association. While patterns of association will sometimes be suspect
in themselves (for example, joint business ventures of a bank officer and a
borrower from the bank), more often the patterns will be discovered by investigating all of the associates of one person. Finally, it vests huge discretion
in the investigators as to what information to gather and how to analyze and
use it. 35 Probable cause is not operative in obtaining and analyzing this information, and the constitutional propriety of such a system must be questioned
although its necessity as a technique for detection cannot be.
B. Investigation
The detection phase uses strategic intelligence to decide where a further
look is indicated. The investigation phase attempts to discover whether a crime
has been committed, and if so, what crime or crimes. Again, white collar crime's
unique characteristic of being intermingled with legitimate transactions creates
the basic problem. At the outset there is reluctance to investigate a legitimate
business and pressure not to do so.36
The real problem, however, is the identification of the suspicious activity
and the acquisition of information demonstrating it to be a crime. The question of existence of criminal intent is important to both the investigation and
prosecution. If there is no criminal intent the activity is not a proper subject
for prosecution or further investigation. In any case, criminal intent is generally
a matter proven by indirect evidence, and such indirect proof usually requires
more evidentiary material than would be needed if direct proof of intent were
possible. Edelhertz describes several indicia of criminal intent, including: facts
which admit of virtually no legitimate explanation; activities which could have
no legitimate motive; repeated wrongful activity; inconsistent statements;
systematic misleading statements; admissions; obstruction of investigations; and
knowingly false statements.3 7 Many of these indicia in fact beg the question,
but it must be apparent that a greal deal of information is required before even
a tentative conclusion can be reached about most of the threshold criminal
intent questions.
Nothern describes "badges of fraud" which likewise presume the possession of a great deal of information, including: double sets of records, mixing
of personal and business funds, failure to record transactions, fictitious expenses
and invoices, destruction of records, large cash transactions, putting assets in
the names of others, and suspiciously low income.3" According to the
Massachusetts Special Commission, the "badge" of bribery is cash generation.
Bribery transactions are almost always in cash and in amounts not normally kept
in an office. 39 Discovering cash generation requires the inspection of huge
3
Analysis is by no means a self-executing process. R. HAGEN, supra note 5, at 9.
3
'6INVESTIGATION MANUAL, supra note 1, at 32.
3
11d. at 124-37.
See Nothern, Protectingthe Client in CriminalTax Investigations, 11 WASHBURN L.J. 10, 22-24(1971).
3
399 SPECIAL COMMISSION REPORT, supra note 10, at 78-79.
Fall, 19821
BUSINESS PAPERS RULE
amounts of documents as it is not immediately apparent and can be accomplished
in many ways." ° One company used checks written to "Cash," checks written
to its treasurer, reimbursement checks, and sizeable "bonus" checks written
to secretaries." Many of these checks were inherently suspect, e.g., huge bonuses
to a low-paid employee, but in other cases it was necessary to trace the entire
transaction to discover its actual purpose. In one instance, investigators
discovered that a check for an odd amount of money (rather than for the even
hundreds apparently preferred by bribers), paid as a bonus to an employee,
was intended to reimburse the additional tax liability incurred by the employee
because of the other false bonus checks. 2
If discovering just these initial "badges" requires so much, the actual investigative work of separating out the legal from the illegal will be tremendous. 3
As well as being time-consuming, expensive, and requiring a highly skilled team
of accountant-investigators," the investigation will, from its initiation, require
large amounts of documentary evidence, as that is the only kind which cannot
change. 5 Investigators will require bank records, loan files, cashed checks,
securities records, and records of cashiers' checks, money orders, and travellers'
checks." ' The goal is to separate suspicious from innocuous transactions so that
a fuller investigation of the former can be made. 7
The purpose in assembling all of this material is to follow the "paper trail"
of a criminal transaction. In order to follow that trail huge discretion
must be placed in the hands of the investigators. An Assistant United States
Attorney has said that "[Enforcement] require[s] extensive examination of financial records in order to follow the often complicated and sophisticated methods
devised to hide illegal transactions. As a result, the operation of corporations,
partnerships, and other business entities is often closely scrutinized by
investigators."" 8 It is preferable, of course, that the investigation be kept secret
for as long as possible so that the suspect will not be able to react by destroying records. As a result, there is a certain pressure on the courts to allow as
"Id. at 2:103-13, 5:"Case Studies of Cash Generation."
"Id. at 4:"Desmond & Lord," 54-61.
"Id. at 4:"Desmond & Lord," 60.
"See Note, Investing Dirty Money: Section 1962(a) of the Organized Crime ControlAct of 1970, 83 YALE
L.J. 1491 (1974) (discussion of the problems of separating funds).
"Comm. Print No. 16, supra note 5, at 21, 27, 31-33.
11R. O'NEILL, INVESTIGATION PLANNING 7 (1979). Documents are also important to corroborate witness'
statements, see Watergate Special Prosecution Force, Policy and Procedure in the Investigation and
Prosecution of Government Officials, 12 CRIM. L. BULL. 26, 35 (1976).
"6See R. NOSSEN, DETERMINATION OF UNDISCLOSED FINANCIAL INTEREST (1979). See also R. CONDON,
MANAGING AN INVESTIGATION INTO PUBLIC CORRUPTION 12 (1979); Nothern, supranote 38, at 24; Webster,
supra note 16, at 667.
47R. NOSSEN, supra note 46, at 8.
"Vaira, Use of the Grand Jury to Obtain Business Records, 59 CHI. B. REC. 32, 32 (1977). But cf. Lowther
v. United States, 455 F.2d 657 (10th Cir.), cert. denied, 409 U.S. 857 (1971) (prosecution of very complex
stock fraud case wherein the detailed tracing of transactions led to confusion of the court).
[Vol. 16:2
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much ex parte examination of material as possible.
9
Warrants and subpoenas issued in these circumstances cannot be models
of particularity and limited discretion. Clearly a thorough investigation will have
to be made of a suspect's personal and business records to sort out the wheat
from the chaff.5 Additionally, use of associative "guilt" must be made by the
investigators, in that those parties who have done business with the suspect will
also be subject to wide-ranging scrutiny, not only to see if the person is an
accomplice but also simply to determine whether a record of the original suspect
is false or incomplete. 5' Where the boundaries of the illegality are so hazy, as
in white collar crime, the boundaries of the investigation will be equally hazy
and consequently discretionary.
C. Prosecution
As has been noted from the outset, the key question in white collar crime
cases is why a particular transaction or series of transactions took place, not
the mere fact that they occurred.5 2 This question of purpose and intent,
troublesome in investigation, is the center of a prosecution because it often makes
the difference between a legitimate transaction and an illegal one. 3 It is also
true that direct evidence of intent is very rare. The crime would not be perpetrated
if the intent were obvious. Intent to defraud, for example, "must be inferred
from a series of seemingly isolated acts and instances." 4 These instances are
complex transactions recorded in, or wrongfully omitted from, voluminous
books and records. 5 And because the complex transactions are only indirect
proof, the complexity is multiplied. 6 Not only is information required from
more than the suspect's own files, but often information from earlier or later
periods is needed. 7 The boundaries of the crime are indistinct and the material
used to prove it can go far afield.
"Since bank records are not clothed with a "legitimate expectation of privacy" for fourth amendment
purposes, United States v. Miller, 425 U.S. 435 (1976), this is already the case with such records as a
constitutional matter.
"For example, in a real estate fraud investigation the police used a warrant which included the phrase,
"together with other fruits, instrumentalities and evidence of crime at this [time] unknown," and the Court
found that this was not overly broad under the circumstances. Andresen v. Maryland, 427 U.S. 462, 478-81
(1976). Accord Shaffer v. Wilson, 523 F.2d 175, 180 (10th Cir. 1975), cert. denied, 427 U.S. 912 (1976).
"INVESTIGATION MANUAL, supra note 1, at 137-45.
1H. EDELHERTZ, supra note 14, at 47. See also PRACTICING LAW INSTITUTE, DEFENDING WHITE COLLAR
CRIMES 97 (1976).
"Ogren, supra note 9, at 969. Motive is crucial in convincing a jury.
INVESTIGATION MANUAL, supranote
1, at 30-31.
"4Aiken v. United States, 108 F.2d 182, 183 (4th Cir. 1939). See also United States v. Bernstein, 533 F.2d
775, 779 (2d Cir.) (FHA mortgage fraud), cert. denied, 429 U.S. 998 (1976). These cases can become so
complex that the Government has been given extra time to prepare its case. See, e.g., United States v.
MacClain, 501 F.2d 1006, 1010 (10th Cir. 1974); United States v. MacKay, 491 F.2d 615, 620 (10th Cir.
1973), cert. denied, 416 U.S. 972 (1974).
"Schwartz & Schachter, Preindictment Strategy for the Attorney-Accountant Defense Team in WhiteCollarFraud Cases, 15 CRIM. L. BULL. 213, 214 (1979).
"Confusion is hardly surprising in such cases. See, e.g., Lowther v. United States, 455 F.2d 657 (10th
Cir.), cert. denied, 409 U.S. 857 (1972).
"See, e.g., United States v. Waller, 468 F.2d 327, 329 (5th Cir. 1972), cert. denied, 410 U.S. 927 (1973);
Feichtmeir v. United States, 389 F.2d 498 (9th Cir. 1968).
Fall, 1982]
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Tax evasion provides an excellent study of proof by indirect evidence. 58
Direct proof from the taxpayer is possible for the fact of deficiencies, through
proof of omission of specific items. Of course, the entire records of the taxpayer are required for this effort. 9 However, it is more often the case that the
taxpayer does not have such records and the investigator is immediately forced
to go to third parties to obtain information.
By far the most common method of proof in tax cases is the "net worth"
method. This requires establishing with certainty the taxpayer's net worth at
the beginning of the period being studied. Then the Internal Revenue Service
must prove that there was an increase in net worth at the end of the period,
that the source of that increase is likely to be taxable, and that it was not reported.
Proving beginning net worth is a very difficult process, as the Government must
locate every possible source. This requires extremely broad canvassing of banks,
assets, transactions, and associates.
Other indirect methods are less broad in scope, but are often used in
connection with each other or with the net worth method. The "expenditures"
method attempts to show that the taxpayer's expenditures were too great given
his reported income. The "deposits" method is the inverse, showing that deposits
were too high for the reported taxable income. In both methods, two complicating factors must be noted. First, the acquisition of records of all of these
transactions will be very difficult. For example, expenditures can be made
anywhere; cash placed in a safe deposit box will be hard to discover. Second,
the inferences drawn here can be weak, and much care must be taken to foreclose
all legitimate explanations. Especially with a sophisticated concealer, a great
deal of sorting out of transactions will have to be done before this can be
achieved.
Also, in addition to the fact of the deficiency, intent must be proven as
well if the case is to be criminal rather than civil. It is indicative of the difficulties in this field that Mirandawarnings" are now required at all initial interviews with taxpayers, even where the original inquiry is civil."'
The characteristic of intermingling legitimate and illegal business activity
in white collar crime means that at every step of the enforcement process, from
detection to investigation to prosecution, investigators must cast a very wide
net. The standard of relevance is very broad at all stages and it necessarily subjects people to scrutiny on little evidence and vests a large amount of discretion in the police. Neither of these results comport well with conceptions of
"See PRACTICING LAW INSTITUTE, WHITE COLLAR CRIMES 131 (1978); Duke, supra note 2, at 8-15 (very
detailed work); Nothern, supra note 38, at 16-22. See also INVESTIGATION MANUAL, supra note 1, at 5
app. D; WHITE COLLAR CRIMES 145-70 (G. Naftalis ed. 1980).
"I.R.S. summonses use a standard of "might throw light upon the correctness" of the tax return. Silets
& Glazer, Summonses, Subpoenas, Grand or Otherwise - The Government Search for Corporate
Information, 55 TAXES 794, 796-97 (1977).
"See Miranda v. Arizona, 384 U.S. 436 (1966).
1115 (7th Cir. 1969).
"United States v. Dickerson, 413 F.2d 1111,
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personal privacy, and it is to that conflict that the article now turns.
III. THE CONFLICT WITH PERSONAL PRIVACY
Four constitutional privacy doctrines have developed from the core concept of a "right to be let alone." 62 These doctrines are: a general right to privacy
as enunciated in the Griswold v. Connecticut63 and Roe v. Wade " cases; the
fourth amendment restrictions on searches and seizures;6 5 the fifth amendment
privilege against self-incrimination; 66 and the first amendment rights to freedom
of association and expression. 6 These protect certain areas of a person's life
from governmental interference and limit official discretion in those intrusions
which are permitted. Leaving detailed discussion of constitutional doctrine for
later, the article now discusses the scope of the privacy policies found in the
Constitution and describes the conflict between these goals and the law enforcement methods mandated by the nature of white collar crime.6"
A. The Right to Be Let Alone
A right of privacy per se was first enunciated in the celebrated article by
Warren and Brandeis. 69 The privacy they described was a common law
concept based on "the principle ... of an inviolate personality."° ",[T]he individual is entitled to decide whether that which is his shall be given to the
public." ' Dean Griswold worked from Brandeis' later application of privacy
ideas to the Constitution and found privacy to be "the underlying theme of
the Bill of Rights." 72
2
Warren & Brandeis, The Right to Privacy, 4 HARV. L. REV. 193, 195 (1890). SeeOlmstead v. United States,
227 U.S. 438, 478 (1928) (Brandeis, J., dissenting).
63381 U.S. 479 (1965).
66410 U.S. 113 (1973).
"U.S. CONST. amend. IV states:
The right of the people to be secure in their persons, houses, papers, and effects, against
unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon
probable cause, supported by Oath or affirmation, and particularly describing the place to be
searched, and the persons or things to be seized.
"U.S. CONST. amend. V, in pertinent part, states: "No person shall be... compelled in any criminal case
to be a witness against himself ...."
"U.S. CONST. amend. I states: "Congress shall make no law respecting an establishment of religion, or
prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right
of the people peaceably to assemble, and to petition the Government for a redress of grievances."
6
A broad interpretation of the constitutional privacy policies is justified at this stage for three reasons.
First, the article approaches the problem by attempting to develop a coherent general approach to the
problem, so it is not bound to current doctrine except insofar as the approach must be realistic. Second,
there is a large body of opinion that a broad interpretation is to be preferred. Third, and most important,
it is fair to say that no one disparages privacy for the sake of disparaging privacy. More limited readings
arise from a balancing of privacy with other values, and even those with the most limited views of privacy
would maximize it to the extent compatible with their other values. So, to achieve a general policy, it
is necessary to begin with the full needs of each of the competing goals.
" Warren & Brandeis, supra note 62.
11Id. at 205.
"Id. at 199.
"Griswold, The Right to Be Let Alone, 55 Nw. U.L. REV. 216,217 (1960) (discussing the fifth amendment).
See also Beany, The Constitutional Right to Privacy, 1962 SuP. CT. REV. 212 (discussing the fourth
amendment).
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BUSINESS PAPERS RULE
The Supreme Court, citing these commentators, decided in Griswold v.
Connecticut" that "[viarious guarantees [of the Bill of Rights] create zones
of privacy."" In Griswold, a zone of privacy, not expressly mandated by the
Constitution, was held to protect the choice to practice birth control in
marriage.7 5 Roe v. Wade,76 relying heavily on Griswold, extended that privacy
rationale to include a woman's right to terminate her pregnancy." This right
of privacy is "founded on the Fourteenth Amendment's concept of personal
liberty and restrictions upon state action.""'
It is apparent that a right to be let alone is seriously compromised by a
system of general intelligence which gathers superficial information from all,
concentrates on a random few,7 9 or relies on brief encounters with others. It
is also compromised by the combining of information which, while in government hands, is not normally used in such a manner.
B. Search and Seizure
The fourth amendment protects "personal security, personal liberty
a man's home and the privacies of life." 8 Personal papers, named in the
text of the amendment, are at the center of this privacy.8" Fourth amendment
protection is accomplished by limiting the discretion of government officials
by requiring that any intrusion on personal privacy be accompanied by a warrant
executed by an impartial magistrate.8 2 These warrants must meet two requirements: they must be supported by probable cause; and they must name the
objects of the search with particularity.8 3
...
3381
U.S. 479 (1965).
1"Id. at 484.
75d.
76410
U.S. 113 (1973).
I77d.
7"Id.
at 153.
"Justice Douglas described privacy thus:
Privacy involves the choice of the individual to disclose or to reveal what he believes, what he thinks,
what he possesses. The article may be a nondescript work of art, a manuscript of a book, a personal
account book, a diary, invoices, personal clothing, jewelry, or whatnot. Those who wrote the Bill
of Rights believed that every individual needs both to communicate with others and to keep his
affairs to himself. That dual aspect of privacy means that the individual should have the freedom
to select for himself the time and circumstances when he will share his secrets with others and decide
the extent of that sharing.
Warden v. Hayden, 387 U.S. 294, 323 (1967) (Douglas, J., dissenting) (footnote omitted).
"Boyd v. United States, 116 U.S. 616, 630 (1886). See also Cardwell v. Lewis, 417 U.S. 583, 589 (1974);
Warden v. Hayden, 387 U.S. 294, 304 (1967); Jones v. United States, 357 U.S. 493, 498 (1958).
"McKenna, The Constitutional Protection of Private Papers: The Role of a Hierarchical Fourth
Amendment, 53 IND. L.J. 55, 68-72 (1977).
"Mancusi v. DeForte, 392 U.S. 364, 368 (1968) ("reasonable expectation of freedom from governmental
intrusion"). See Roe v. Wade, 410 U.S. 113, 153 (1973).
"The Supreme Court has not used "unreasonableness" as an independent test for violation of the fourth
amendment. Rather, the Court has made the second clause, the warrant requirement, dispositive of the
question of what is an "unreasonable" search or seizure, perhaps because this appears to create a bright
line. See, e.g., Chapman v. United States, 365 U.S. 610, 613 (1961); Agnello v. United States, 269 U.S.
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The probable cause requirement is a problem for enforcement efforts
because of the large amount of material needed to establish that a crime took
place at all, and because a basic requirement of probable cause is a showing that
a crime has been committed. The affidavit requirements of the fourth amend-
ment are very hard to meet when investigators are at the detection phase just
looking for patterns, or at the investigation phase having only the slightest clues
that something is wrong." ' It turns the constitutional scheme on its head to use
warrants to obtain real probable cause, but in many instances this is what law
enforcement officials must be able to do when general intelligence points in
a certain direction but there is as yet no hard evidence."
Particularity is also a problem. The need to go through the complete files
of a person or business (or both), as well as those of related third parties, is
hardly conducive to limited intrusion. The historical purpose of the fourth
amendment was to limit general incursions into people's privacy,86 and this constitutional policy against general warrants has been carried through to the
present day.87 Justice Holmes, speaking for the Court, enunciated this pur20, 33 (1925). See also N. LASSON, THE HISTORY AND DEVELOPMENT OF THE FOURTH AMENDMENT TO THE
UNITED STATES CONSTITUTION 103 (1937). Thus, attention has centered on whether or not a "search" has
taken place, e.g., Katz v. United States, 389 U.S. 347, 353-54 (1967). If a "search" has taken place, then
the probable cause and particularity requirements apply with full force; if no "search" has taken place,
then these requirements do not apply at all. See, e.g., Chimel v. California, 395 U.S. 752 (1969); Warden
v. Hayden, 387 U.S. 294 (1967). While much of the material that law enforcement needs to obtain is no
longer considered subject to a "search" by the Supreme Court, for example, bank records, much needed
material, such as private and business records, are still subjects of "searches." Also, probable cause and
particularity illustrate the fundamental policies of the amendment, which can be validly used to analyze
the state of the law whether or not they actually apply in the particular case.
"The probable cause cases concern the hearsay reports of informers, reporting a discrete crime. See, e.g.,
Jones v. United States, 362 U.S. 257 (1960); Spinelli v. United States, 393 U.S. 410 (1969); United States
v. Harris, 403 U.S. 573 (1971). The problem here is different.
"Blakey, Aspects of the Evidence Gathering Process in Organized Crime Cases, in THE PRESIDENT'S
COMM'N ON LAW ENFORCEMENT & ADMIN. OF JUSTICE, TASK FORCE REPORT: ORGANIZED CRIME 92-93, 103
app. C. (1967).
6
" General warrants, which were used to support the Crown's licensing of printed matter, and writs of
assistance, which were used to combat colonial smuggling, are the targets of the fourth amendment. J.
LANDYNSKI, SEARCH AND SEIZURE IN THE SUPREME COURT 20, 22 n.8 (1966). See also Stanford v. Texas, 379
U.S. 476, 481-84 (1965). These warrants were limited in England by the courts in the landmark case of
Entick v. Carrington, 19 Howell's State Trials 1029 (C.P. 1765), see also Wilkes v. Wood, 98 Eng. Rep.
489 (C.P. 1763). Parliament was also aroused to limit them in 1766. T. TAYLOR, Two STUDIES IN
CONSTITUTIONAL INTERPRETATION 35 (1969). However, they were employed with great regularity in the
American Colonies in the 1760's to combat the colonists' printing presses and smuggling. N. LASSON, supra
note 83, at 57-63. The public reaction to them was so fierce that they could seldom be enforced even in
the two colonies (Massachusetts and New Hampshire) where they were issued. Id. at 73-75. After the
Revolution, the several states built safeguards against unreasonable searches into their constitutions, and
these served as the model for the fourth amendment. J. LANDYNSKI, supra,at 38-42. One cannot emphasize
enough that the fourth amendment was meant to protect the people (and their privacy) against the hated
general search. Provisions for searches must therefore be narrowly and carefully worded, to ensure that
specific searches, serving legitimate law enforcement needs, are not abused, or expanded into more pervasive
searches. The amendment finds its force in the fact that it limits governmental intrusion into people's
privacy to a particular object based on particular facts. Stanford v. Texas, 379 U.S. at 477.
'"The Supreme Court has occasionally found general warrants, and when it has, the results of the search
have been suppressed. The classic case, Stanford v. Texas, 379 U.S. 477 (1965), involved a warrant
authorizing the search for and seizure of two thousand of the petitioner's books and pamphlets in an
effort to confiscate communist literature. Id. at 477. The searchers seized, in addition to Marxist literature,
books by Pope John XXIII and Justice Black. Id. at 480. In Berger v. New York, 388 U.S. 41, 55 (1967),
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BUSINESS PAPERS RULE
pose in Federal Trade Commission v. American Tobacco Co.,"8 stating that
the Government may not "direct fishing expeditions into private papers on the
possibility that they may disclose evidence of crime." 9 However, the actual
breadth of this rule has been cut back in the face of the needs of white collar
crime enforcement. 90
The recurrent theme in fourth amendment cases is the limitation of police
discretion: "As to what is to be taken, nothing is left to the discretion of the
officer executing the warrant." 9' Yet the use of expert investigators and vast
documentary material is the very model of discretion. The fourth amendment,
adopted in 1791, is aimed at traditional, discrete crimes and is severely strained
in its application to white collar crimes which involve the intermingling of
legitimate and illegal activity.
For the purposes of analysis, this article will discuss the standards for
searches rather than for subpoenas or other compulsory process. Since policies
are being discussed here, it is appropriate to consider the limits of the more
intrusive kind of invasion of privacy. The Supreme Court has rejected any constitutional mandate that a subpoena rather than a search warrant be used in
certain situations, 92 so the more intrusive method is always a present possibility.
And, of course, there are times when a subpoena is inadequate from a law
enforcement perspective, for example, where double sets of books are
suspected. 93 In those cases, the police will need to be able to operate within
the warrant requirements.
C. Self-Incrimination
As a privacy policy, the fifth amendment protects the innermost core of
privacy, a "private enclave" from which a person can exclude the whole world. 94
The important early interpretation of the amendment, Boyd v. United States,9
linked the fourth and fifth amendments very closely by equating the illegal seizure
an important precursor of Katz, the Court based its rejection of the New York wiretap statute on the
lack of particularization of the material to be seized.
"264 U.S. 298 (1924).
"Id. at 306. See also Silverthorne Lumber Co. v. United States, 251 U.S. 385 (1920).
"Andresen v. Maryland, 427 U.S. 462, 478-81, 482 n.l 1 (1976). The Court held that it was sufficient
"inthe context," but provided no other guidance. Justices Brennan and Marshall dissented on this point.
Id. at 492 (Brennan, J., dissenting); id. at 493 (Marshall, J., dissenting).
'Marron v. United States, 275 U.S. 192 (1972) (cited with approval in Stanford, 379 U.S. at 485). See
also Weeks v. United States, 232 U.S. 383, 391 (1914).
"Zurcher v. Stanford Daily, 436 U.S. 547, 559 (1978). Justice Stewart argued that because a first amendment
value was implicated here, burdening a free press, only a subpoena should be permitted. Id. at 571 (Stewart,
J., dissenting). Justice Stevens made the important point that it was the demise of the "mere evidence"
rule in Warden v. Hayden that permitted warrants to be used for any evidence. Id. at 577-78 (Stevens,
J.,dissenting).
"Cf. Andresen v. Maryland, 427 U.S. 462 (1976) (warrant to search office of a lawyer suspected of real
estate fraud).
"Murphy v. Waterfront Comm'n., 378 U.S. 52, 55 (1964) (excellent discussion of the policies behind the
fifth amendment). See also Couch v. United States, 409 U.S. 322, 338 (1973) (Douglas, J., dissenting).
" 116 U.S. 616 (1886).
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16:
96
of private books and papers with compulsion to testify. Under Boyd, the fifth
amendment was viewed not so much as a restriction on police procedure as
97
expressing policy that
a guarantee of a privileged "private inner sanctum,"
documents which a person writes for his own use and kept private and in his
98
possession ought not to be reachable by the Government.
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EVIEW[Vol
Boyd itself involved business papers (invoices), and such records, precisely
the kinds of records most necessary to white collar crime enforcement, were
held to be part of that "private inner sanctum." This broad view of the privacy
guaranteed by the fifth amendment has not lasted,9 9 but it has been dismantled
in such a patchwork way that it often provides too much access to private
information.
D. Association and Expression
That the first amendment could be a limitation on police activity on the
basis of privacy concerns is a relatively new idea and not fully accepted, but
it illustrates an important privacy policy based on the frequent need for privacy
in practicing the basic freedoms of thought, association, and expression. This
right, first clearly articulated in NAACP v. Alabama, 00 originated in the need
by many associations to maintain the privacy of their membership lists to ensure
the survival of their organizations. '0 ,Check stubs and expense records are highly
relevant to white collar crime investigations. They are also sure leads to a person's private, first amendment-protected associations,' 2 as are contributions,
collections of literature, and correspondence, all of which would be examined
either to get a full picture of a person's finances for, say, the net worth method,
or simply inevitably in going through his files.
The association-link technique so often used in these investigations' 3 is
objectionable in first amendment terms. People will be less likely to associate
with organizations or with other persons if their associations are likely to lead
"Id. at 633. Put another way, the fifth amendment protects a person from the use against him of evidence
obtained in violation of the fourth amendment. Agnello v. United States, 269 U.S. 20, 33-34 (1925).
"Couch, 409 U.S. at 327. See Fisher v. United States, 425 U.S. 391, 416 (1976) (Brennan, J., concurring
in the judgment); Couch, 409 U.S. at 338, 342 (Douglas, J.,dissenting); Murphy, 378 U.S. at 55 ("a
private enclave where he may lead a private life"). Since Warden v. Hayden overruled the "mere evidence"
rule, nothing is by its nature privileged under the fourth amendment from seizure. Andresen, 427 U.S.
at 485 (Brennan, J.,dissenting).
9
Couch, 409 U.S. at 350-51 (Marshall, J., dissenting). For efforts to categorize documents as to privacy,
see Fisher, 425 U.S. at 426-27 (Brennan, J., concurring in judgment); Comment, The Search and Seizure
of PrivatePapers:Fourth and Fifth Amendment Considerations,6 LOYOLA L.A.L. REV. 274,301-03 (1973).
"Couch, 409 U.S. at 328 (the fifth amendment applies to persons, not documents). See Andresen, 427
U.S. at 472-74 (a search warrant is not compulsion within the meaning of the fifth, so anything is reasonable).
" 357 U.S. 499 (1957).
'"Id. at 462. The Court based this proposition on United States v. Rumley, 345 U.S. 41, 56-58 (1953)
(Douglas, J.,concurring).
"'The Court brushed this objection aside in CaliforniaBankers, 416 U.S. at 75-76, in which bank recordkeeping requirements were upheld. But CaliforniaBankers did not confront the ultimate issue of disclosure
of the information and so does not foreclose the whole idea.
"'See supra text accompanying notes 29-32.
Fall, 1982]
BUSINESS PAPERS RULE
to their being investigated. "[A] person must have a right to draw a cloak of
secrecy around his personal associations and his more intimate relationships
if he is to retain his autonomy.""04 In addition, the type of information acquired
- attendance at meetings, 0 5 correspondence, and financial records - raise
first and fourth amendment problems.
White collar crime presents a new and unique characteristic, the intermingling of legal and illegal, which raises acute problems for law enforcement.
While privacy needs have always been to some extent in conflict with the requirements of effective law enforcement, in white collar crime the conflict is especially
serious. Law enforcement needs are fundamentally at odds with basic privacy
rights and desires of citizens. To say this, however, cannot predetermine the
resolution of the conflict. The real problem, to which the article now turns,
is developing an approach which meets both needs in such a way as not to
sacrifice the essentials of either.
IV.
TOWARD
A
RESOLUTION OF THE COMPETING GOALS
A. Two Polar Solutions
Two polar solutions might be adopted in accommodating the competing
goals of effective law enforcement and personal privacy. That is, one could
be sacrificed for the other, and the converse. Rather than being extreme or silly
alternatives, used merely to prove that as always the truth lies somewhere in
the middle, these solutions are the rational result of a decision that for virtually
all purposes one goal is more socially desirable than the other. In more innocent times, the dominant attitude on the Supreme Court was that a person's
home was his castle, inviolable by the government except in the rarest of
circumstances.'0 6 More recently, the legitimate needs of law enforcement have
been stressed by the Court, resulting in a less deferential approach to personal
privacy. 07 The two polar solutions set out below, then, are not caricatures but
two real alternatives.
It could be decided that, because personal privacy is so deeply implicated
by the investigation of certain crimes, it is better not to try actively to prosecute those crimes. Income tax evasion, for example, makes use primarily of
personal financial records. So, it is preferable not to make random checks of
all of a person's records at all but simply to accept the fact that tax evasion
will not be prosecuted except when it is obvious (an unaccounted for W-2 form
is received by the IRS, for example) or otherwise revealed (an informer) to a
"'Hufstedler, The Directionsand Misdirections of a ConstitutionalRight to Privacy, 26 REC. A.B. CITY
N.Y. 546, 558 (1971).
" The Court has tended to find that surveillance without more does not constitute a justiciable controversy.
Laird v. Tatum, 408 U.S. 1 (1972) (Army domestic intelligence activities). Accord, Fifth Avenue Peace
Parade Comm. v. Gray, 480 F.2d 326 (2d Cir. 1973) (FBI monitoring persons leaving New York in buses
for an anti-war rally in Washington), cert. denied, 415 U.S. 945 (1974).
"E.g., Boyd v. United States, 116 U.S. 616 (1886).
" See cases cited supra note 4.
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purely reactive investigator. The "net worth" method necessarily involves delving
into a person's whole lifestyle, his association, thoughts, and activities. Such
private books and records are exactly the things protected in Boyd.' °8
Bribery, likewise, would be impossible to detect without examining business
records as well as personal financial records and statements,' 9 so perhaps it
is preferable to wait for a reliable informer to provide the basis for an
investigation.' I 0 Of course, these informers will be rare, since bribery is a selfcontained crime with none of the culpable participants having an incentive to
betray their cohorts."' But an informer would provide probable cause for
searches and also limit the searches to particular persons and, to a lesser extent,
to particular things. This is probably the kind of basis for investigation envisioned
by Justice Holmes in the American Tobacco case."II A clear suspicion of the
provide "[slome evidence of
crimes committed, by whom, and when would
3
the materiality of the papers demanded."'
In both of these cases, a paramount regard for privacy does not mean a
total lack of law enforcement or a license to commit white collar crimes. What
it does mean is that the role of law enforcement is limited to a reactive investigation, rather than a proactive or aggressive one.' 'I It has been previously noted
that effective enforcement requires proactive measures,' '5 but if privacy is to
be placed paramount it may be necessary to forego such vigorous law enforcement efforts.
At the opposite pole is the attitude that personal privacy just cannot be
that important. Living in a highly technological, information-based society,
with checks, bank cards, securities, credit cards, and the rest, a person cannot
reasonably expect to conduct his affairs in any real privacy. Indeed, this
technological revolution is responsible for the rise of the kind of crime which
takes advantage of the complexities of modern life and hides itself within them.
It seems only fair that such technology should carry with it certain burdens.
The conditions of modern, interdependent society do not permit a "right to
be let alone."
'"116 U.S. 616 (1886).
1°1R.
NOSSEN, supra note 46, at 4.
"'Informers are not unknown and are often invaluable. See, e.g., United States v. Harper, 458 F.2d 891
(7th Cir. 1971), cert. denied, 406 U.S. 930 (1972). In Harper, a former employee of a wagering operation
(with the unforgettable name of Mattie Turnipseed) contacted the I.R.S. of her own volition, without
any prior relationship between them, and gave them very important records. The Government in this case
was able to discover a white collar crime without any governmental invasion of privacy. Id. at 894. However,
the world is not populated entirely with Mattie Turnipseeds.
''See supra text accompanying note 8.
"2264 U.S. at 306.
1131d.
"'An example of a purely reactive approach was the discovery that international currency regulations
were being violated when federal agents inadvertantly found large amounts of currency in a package from
the Phillipines. United States v. Beusch, 596 F.2d 871 (9th Cir. 1979).
'"See supra text accompanying note 23.
Fall, 1982]
BUSINESS PAPERS RULE
This approach is exemplified in the recent bank records cases, California
Bankers Association v. Schultz"1 6 and United States v. Miller.'2 The background
of the cases was the realization by Congress that (to quote the first sentence of
the Senate Report on the Bank Secrecy Act of 1970"1) "law enforcement
authorities ... [require] greater evidence of financial transactions in order to
reduce the incidence of white collar crime."" 9 The Bank Secrecy Act requires
that banks keep permanent records of the identity of account holders, microfilm
copies of all checks drawn on or received by the bank, and records of large
currency transactions. '2 0
The importance of photocopies of checks to effective law enforcement,
especially where white-collar crimes are concerned, simply cannot be
overestimated .... In many instances, payments by check which are not
necessarily illegal in and of themselves may constitute the only way that
the prosecution can establish the existence of a relationship or pattern of
conduct which may be essential to making its case. 121
Officials of the banks which would have to pay for this recordkeeping and who
prefer to keep their clients' confidences were less enthusiastic, claiming that
this was "tantamount to a declaration that a person's bank account is no longer
private"'2 2 and suggesting that the cost of this program far outweighed its
usefulness.'2 3 But Congress was convinced by the law enforcement officials who
forcefully asserted the need for these materials."'
After passage of the Bank Secrecy Act, depositors and banks filed suit
to have the record-keeping rules declared unconstitutional. Explicitly recognizing
the needs of law enforcement vis-a-vis white collar crime, the Supreme Court
upheld the Act in CaliforniaBankers Association v. Schultz,' 5 insisting that this
was not a general warrant authorizing general rummaging.2 6 Given the
'"416 U.S. 21 (1974).
"425 U.S. 435 (1976). The views in the preceding paragraph, though only implicit in California Bankers
and Miller, lead to the same result.
".Pub. L. No. 91-508, 84 Stat. 1114 (1970). The Act emphasized secret foreign accounts, but litigation
has concentrated on domestic reporting requirements.
''IS. REP. No. 1139, 91stCong., 2d Sess. 1(1970). Seealso H.R. REP. No.975,91stCong., 2d Sess. 10(1970).
"'Pub. L. No. 91-508, 84 Stat. 1114, § 101 (1970); S. REP. No. 1139, 91st Cong., 2d Sess. 14 (1970).
"2'H.R. REP. No. 975, 91st Cong., 2d Sess. 16 (1970).
"'Foreign Bank Secrecy: Hearings on S. 3278 and H.R. 15073 Before the Subcomm. on Financial Institutions
of the Senate Comm. on Banking and Currency, 91st Cong., 2d Sess. 188 (1970) (statement of Carl W.
Desch, First National City Bank of New York) [hereinafter cited as Bank Secrecy Senate Hearings].
"'Foreign Bank Secrecy and Bank Records: Hearings on H.R. 15073 Before the House Comm. on Banking
and Currency, 91st Cong., 2d Sess. 320 (1970) (statement of Carl W. Desch) [hereinafter cited as Bank
Secrecy House Hearings].
"Bank Secrecy Senate Hearings, supra note 122, at 248-50 (statement of Anatole G. Richman, IRS);
Bank Secrecy House Hearings, supra note 128, at 27, 90, 100-01 (statement of Robert M. Morganthau).
" 416 U.S. 21 (1974).
"'California Bankers, 416 U.S. at 28, 62. A concurrence joined by two of the justices out of the six in
the majority, however, stressed the high threshold ($10,000 in currency) for the reporting requirements,
pointing out that a lower amount would "touch upon intimate areas of an individual's private affairs."
Id. at 78-79 (Powell and Blackmun, JJ., concurring). Justice Douglas objected to the broad scope of the
record-keeping requirements, arguing that just because everything is incrementally useful to law enforcement
the fourth amendment does not simply disappear. Id. at 80-85 (Douglas, J., dissenting).
AKRON LAW REVIEW
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inherently intermingled nature of bank records of legitimate and illegitimate
27
activities, one may question the realism of this insistence.'
Subsequently the Court held that a person has no legitimate expectation2
of them' 1
of privacy in bank records - and so no fourth amendment protection
- because of their existence as government-required records, on the grounds that
they only existed and were not released.' 29 The circularity of this reasoning is
troubling as it effectively permits the government to determine the extent of
the individual's legitimate expectations of privacy. 3 0 Thus, all limitations on
breadth of and reason for intrusions are lifted, ignoring entirely the clear Congressional intent to require "existing legal process" to be used for access.' 3 '
The Fifth Circuit has held that United States v. Miller'3 2 "allows wide discretion to investigatory bodies in obtaining information concerning bank activites,"
citing white collar crime as the reason for this broad discretion.' 3
People reveal information about themselves to others for various, often
very limited, purposes. Much financial information is conveyed to a bank so
that the bank will process the request, not so that it will consider the transaction
and evaluate, or prosecute, the person in light of it. The Supreme Court in
Miller, however, reasoned that bank records are "information voluntarily conveyed to banks and exposed to their employees in the ordinary course of
business," ' 3 and so the records "are not confidential communications. 135 The
Miller Court based this "assumption of risk" argument on two informer cases,
United States v. White 36 and Hoffa v. United States.13 But to name them suggests the distinction. One expects a human being to evaluate, digest, recall, and
perhaps repeat information. One expects a bank merely to register and perform a transaction.' 38 As one government agency report has said "[tjhere must
'"This characteristic of bank records, that it is difficult if not impossible to sort out the relevant entries
prior to examining them, has long been recognized. E.g., United States v. First Nat'l Bank of Mobile,
295 F.142 (S.D.AIa. 1924), aff'd per curiam, 267 U.S. 576 (1925).
"'Miller, 425 U.S. at 442.
"'CaliforniaBankers, 416 U.S. at 52-53.
"'See Miller, 425 U.S. at 455-56 (Marshall, J., dissenting).
"'H.R. REP. No. 975, 91st Cong., 2d Sess. 10 (1970).
'425 U.S. 435 (1976).
"'In re Grand Jury Proceedings, 532 F.2d 404, 408-09 (5th Cir. 1976).
'"Miller, 425 U.S. at 40-42.
'3Id.
'401 U.S. 745 (1971).
'"7The informer cases might be analogized to one-party consent wiretapping. A human recipient is capable
of consenting to government wiring of him for sound, and, according to White, a speaker takes this risk
in choosing persons with whom to speak. Justice Harlan vigorously disagreed in his very eloquent dissent.
White, 401 U.S. at 786. The bank is not analogous. The "speaker" cannot choose whether or not to reveal
information to the bank. This argument was developed in the House Intelligence Committee. See H.R.
REP. No. 1283, 95th Cong., 2d Sess. 53 (1978).
"'The "mail cover" technique, see supra note 27, also involves a transaction in which the post office
is intended to be simply the medium, not an evaluator or recorder. Yet mail covers have been held not
to be searches because the envelope is "voluntarily conveyed to the Postal System," based on the analogy
with Miller. United States v. Choate, 576 F.2d 165, 175 (9th Cir.), cert. denied, 439 U.S. 953 (1978) (mail
cover to determine the address in South America of defendant's source of smuggled goods).
Fall, 19821
BUSINESS PAPERS RULE
be a way for an individual to prevent information about him obtained for one
purpose from being used or made available for other purposes without his
consent.'"9 Exposure of information to one individual is not exposure of that
information to the whole world.'4I
Congress, it turned out, did not have Miller's wide discretion in mind when
it passed the Bank Secrecy Act, and it enacted the Right to Financial Privacy
Act of 19781'' to require legal process for access to bank records. When law
enforcement goals are placed paramount generally to privacy, the result is
destruction of privacy safeguards across the board.
In another white collar crime case, the Court weakened the fourth amendment particularity requirement to the vanishing point by upholding a warrant
which specified the crime and some documents but which ended, "together with
other fruits, instrumentalities and evidence of crime at this [time] unknown." 4I2
The Court justified its stand on the basis of a detailed exegesis of the warrant's
text, which, while plausible, is more a post hoc rationalization
than an effec4 3
warrant.'
the
of
execution
actual
the
on
tive limitation
Neither this nor the privacy response to the problem of white collar crime
is satisfactory. White collar crime is a very serious problem. The costs to the
nation, in money, in the public sense of well-being, and in faith in the integrity
of government and the economic system, are staggering, and the problem is
worsening.
On the other hand, as privacy becomes a less common and
accessible commodity it becomes more valuable. A general diminution of privacy
rights is repugnant to constitutional guarantees. Institutions, like banks,
are used out of necessity, not choice, and it is not fair to burden their use with
the possibility of disclosure of one's private life. As a matter of public policy
it has been noted that Congress was unwilling to go along with the Supreme
Court's idea that bank records create no expectation of privacy.'
B. Specifications for a Privacy Doctrine
A substantive privacy doctrine is needed which permits the kind of broad
investigation necessitated by white collar crime, but which is limited to white
collar crime because the needs of white collar crime investigators and prosecutors
are unique. A rule must be fashioned which gives priority to law enforcement
I39U.S. DEPT. OF HEALTH, EDUCATION AND WELFARE, SECRETARY'S
ADVISORY COMMITTEE ON AUTOMATED
DATA SYSTEMS, RECORDS, COMPUTERS AND THE RIGHTS OF CITIZENS 38-42 (1973).
"'Compare the Court's statement in Katz that one who speaks into a telephone "is surely entitled to assume
that the words .. .will not be broadcast to the world." 389 U.S. at 532.
"Pub. L. No. 95-630, 92 Stat. 3697 (1978). The Act provides that, except for narrowly defined emergencies
and exigent circumstances, bank records kept pursuant to the Bank Secrecy Act may only be obtained
by customer consent, subpoena, search warrant, or "formal written request."
"'Andresen, 427 U.S. at 479-82. In dissent, Justices Brennan and Marshall assailed the warrant as
"impermissibly general." Id. at 492-93 (Brennan, J., dissenting); id. at 493 (Marshall, J., dissenting).
"'Cf.supra text accompanying note 91 (officer executing warrant to be allowed little if any discretion).
"4INVESTIGATION MANUAL, supra note 1,at 10-11.
"'See supra text accompanying note 141.
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where it most needs it and priority to privacy in those areas which should be
most private. To be workable, the rule must also meet several other requirements.
It must make a difference. It must help law enforcement officials to fight white
collar crime. Also, to the extent possible, it should provide access to all types
of information generated by white collar crime, both so that it makes a practical difference and so that there is not later overwhelming pressure to erode
privacy rights further to get at novel or more subtle white collar crimes.
The rule must provide a clear guide to law enforcement officials and to
the courts. The police should not have to take the chance when they obtain
documents that they will later be suppressed. The courts in turn should be able
to give a clear and consistent interpretation of what is on one side of the line
and what is one the other. The rule should also not be susceptible to misinterpretation or hostile reinterpretation, as has happened with current fourth amendment doctrine. The basic test for the application of the fourth amendment
was set out in Katz v. United States', as a person's justifiable expectation of
privacy.' 7 This test was originally used by the Warren Court to expand the
applicability of the fourth amendment to intangible objects (in the Katz case,
to a telephone conversation).'" The vagueness of the "expectations" test has
resulted in the Burger Court generally narrowing privacy interests, as in the
bank records cases."4 9 Such shifts are antithetical to clarity for the purposes
of law enforcement officers and also destructive of a coherent law enforcement policy.
The above requirements aim ultimately at a third, and the most important specification, that the rule be stable. This means in part that the rule should
not be susceptible to reinterpretation on an ad hoc basis. It should be made
stable by eliminating strong substantive pressures to change it. That is, it should
balance the goals well enough that it is not unacceptable either to the police
or to the private citizen. The Miller case demonstrated that white collar crime
can put considerable pressure on a privacy rule.' 50
The ultimate goal here is the protection of personal privacy, as law enforcement needs always have a voice in the courts and in government generally.
A person who does not actively seek outside involvement should not become
the subject of general surveillance, and the person who does should still be
allowed some areas of real privacy. With the foregoing considerations in mind,
'389 U.S. 347 (1967).
"'Id. at 353.
148id.
"'Seesupra text accompanying note 116-41. The Court's theory in Miller was that checks are disclosed
to the bank as a party to the transaction and the person cannot expect his checks to be private. The same
rationale has been used by the Supreme Court to withdraw pen registers from fourth amendment protection,
Smith v. Maryland, 442 U.S. 735 (1979) (a person voluntarily exposes the numbers he dials on a telephone
to the telephone company), and by some lower courts to remove protection from mail covers, see United
States v. Choate, 576 F.2d 165 (9th Cir.) cert. denied, 39 U.S. 953 (1978).
" See supra text accompanying notes 126-41.
Fall, 1982]
BUSINESS PAPERS RULE
the article now turns to the "business papers rule," a proposed resolution of
the conflicting law enforcement and privacy goals relating to white collar crime.
V. THE BUSINESS PAPERS RULE
A business papers rule would make available to law enforcement officials,
on a consideraly more relaxed basis than a fourth amendment search
warrant, records of commercial transactions, but would require the full panoply
of constitutional protections for other personal records. The model for the
business papers warrant would be the administrative search warrant. At the
opposite end of the spectrum, the fifth amendment would be applied to the
contents of most personal records.
This proposal will be discussed in three parts. Section A will refine the
idea as a theoretical matter, arriving at an exact description of the rule. It will
also discuss the various alternatives for structuring the rule, as they contribute
to the form of the final proposal. Section B will argue that the business papers
rule is a good solution, that in practice it would aid law enforcement and at
the same time provide basic privacy protections. Finally, Section C will discuss
where the business papers rule fits into the present constitutional scheme,
the point being to show the rule's foundations in the Constitution and its compatibility with basic constitutional policies and doctrines.
A. A Description of the Business Papers Rule
Why think of such a rule in the first place? The most common milieu of
white collar crime is commercial activity of one kind or another. Bankruptcy' 5I
involves a business, as would a contractor attempting to secure an advantage
by a bribe. Embezzlement involves a commercial entity as the principal victim
and holder of records. In personal income tax evasion, the common violation
of underreporting taxable income involves income derived from some type of
commercial enterprise, an employer or an issuer of securities. The use of business
or financial institutions in one way or another is a common denominator of
white collar crime, and it suggests this solution.
Furthermore, commercial activities are not part of the private inner sanc52
tum of the personality which has been said to be at the core of privacy rights.
While personal financial records are private while in one's own hands, those
which are in the hands of commercial enterprises do not intrude on the inner
sanctum because: (a) they are known to other persons, and (b) they provide
only a partial picture of personal finances. That partial picture will be sufficent for intelligence purposes. The IRS summons of a taxpayer's employer's
"'For simplicity, personal bankruptcies are not considered with other bankruptcies. As a privacy issue,
personal bankruptcies would be more like personal income tax evasion.
"'United States v. Blank, 459 F.2d 383, 386-87 (6th Cir. 1972) cert. denied, 409 U.S. 887 (1973) (contrasting
"privately recorded and privately held thoughts ...
as in [a] . . . diary" with "business records of which
other persons must have knowledge"). See Note, Formalism, Legal Realism, and ConstitutionallyProtected
Privacy Under the Fourthand Fifth Amendments, 90 HARV. L. REV. 945,989 (1977). See also MODEL CODE
OF PRE-ARRAIGNMENT PROCEDURE § SS 210.3(2) (1975) (list of documents which are not subject to seizure).
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records as to Social Security number used, Forms W-2, employment records,
and contracts, was held not to violate the employee's fourth amendment
rights.' 53 Where a person holds himself out to do business he exposes that part
of himself.' 54 In the commercial area the state also has traditionally had the
greatest rights to regulate, and the business papers rule is in a sense an extension
of current economic regulation.
At least at first glance, this line based on commercial activities appears
to be clear and stable. It is a distinction not unknown to the law, and indeed
is already to some extent part of our privacy rights. 55 While the actual criteria
for making the choice will have to be worked out, the distinction itself is
intuitive.
Finally, these are the documents needed by law enforcement to combat
white collar crime. The business papers rule is not a token concession to
an otherwise rapacious police department. Commercial documents are, by and
large, the place where original suspicion arises and the stuff of which white
collar prosecutions are made. Except for a few, but important to the individual,
materials, the business papers rule would put nothing entirely beyond reach.
It would require a warrant which meets the strict fourth amendment standards.
Thus, police would have relatively easy access to materials upon which they
could build probable cause and particularized warrants. This appears to be a
realistic allocation of interests which tries to meet the basic needs of both sides.
The line between business and private papers may be drawn in several ways.
The distinctions about to be discussed generally have the virtue of greater
simplicity than the eventual line suggested, but they all have the vice of being
too crude. Their discussion is intended to present for consideration alternatives
to the business papers rule and graphically to describe the elements of the
eventual rule.
It might make a great deal of sense to have the amount of intrusion permitted depend upon the type of crime involved, i.e., white collar or not. This
is not an unknown or impossible distinction to make. The federal wiretapping
statute makes it, on the theory that only the more serious crimes should have
this extra-intrusive level of investigation.' 5 6 It has also been suggested that
wiretapping be limited not so much by the seriousness as by the type of crime,
for instance, organized crime.' 57 Former Secretary of Education and Circuit
'Donaldson v. United States, 400 U.S. 517, 530-31 (1971).
" Id. at 537. (Douglas, J.,concurring). The expression "holds himself out" is intended to convey the
difference between active business transactions and the storing of money, as in a bank. In a savings account,
the only active business is payment of interest, and that is disclosible like any Form W-2. See infra text
accompanying notes 177-78.
"'For a discussion of this distinction as it relates to the proposed business papers rule, see infra text
accompanying notes 203-22.
18 U.S.C. § 2516 (1976 & Supp. IV 1980).
" Blakey, supra note 85, at 100-03. Professor Blakey was involved in drafting the federal wiretap statutes.
Fall, 19821
BUSINESS PAPERS RULE
Judge Hufstedler, a strong supporter of privacy rights, also sees this as a relevant distinction in the kinds of surveillance to be used:
[T]he means used both to prevent and to detect white collar crime,
like securities fraud, are obviously very different from those used in fighting
street crime, like mugging. Mail covers, electronic surveillance, and examination of bank records may have some utility in capturing white collar
crooks but are virtually useless in controlling street crime.' 58
White collar crime created this particularly acute conflict between law enforcement and privacy values, so it makes sense to concentrate on those crimes.
The threshold problem with this approach is the detection problem. It is
often unknown whether or not a crime has been committed at all. And since
the loosened requirements are needed at precisely this point, the line must be'
invoked before it is factually known where the investigation stands vis-a-vis
the line. It would be an invitation to abuse if the police needed only to allege
a white collar crime investigation to obtain access to any documents on a reduced
protection basis.
In addition, there would be a real problem in defining white collar crime
for these purposes. It can be defined for sociological purposes, or as here, for
59
detection and investigation purposes, but it is quite clearly not a legal category.'
White collar crime, for present purposes, can be a complex of crimes, or a complex version of a simple crime. Even if it were possible to draw such a line
statisfactorily, it would necessarily be legislative, not constitutional. The relevant constitutional provisions deal only in terms of privacy, not crimes. This
makes the line inherently more unstable and subject to an ever-widening scope
for the looser requirements because the constitutional mechanics would have
to be a wholesale acceptance of the lower standard, with legislative limits on
its scope. 1 0
The most important objection, however, is that the type of crime is quite
irrelevant to privacy interests. Simply to allow wide inspection, without making
distinctions as to types of documents, would be counterproductive. Particularly
private documents would be available simply by alleging a white collar crime.
Although the needs of white collar crime prosecution are the motive for the
"business papers rule," the fact that a particular transaction involves white
collar crime is too crude a standard to protect privacy adequately.
At first glance, a distinction based on where documents are kept makes
a great deal of sense in terms of expectations of privacy. A home is a more
" Hufstedler, Invisible Searches for IntangibleThings: Regulation of Governmental Information Gathering,
127 U. PA. L. REV. 1483, 1517 (1979).
" See Comm. Print No. 2, supra note 12, at 64; INVESTIGATION MANUAL, supra note 1, at 4-7.
"'This is what happened, for example, with the Right to Financial Privacy Act of 1978, see supra text
accompanying note 141.
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private place than a business, intuitively and constitutionally. ' 6' In addition to
the general privacy interest, a search of home files would certainly require the
examination, at least cursorily, of far more personal information than would
a search of business files. This line would also have the formal value of being
easy, in general, to apply.
On the other hand, this is at best a rough approximation of the interests
really at stake. Privacy in fact attaches to particular information, not to particular places.1 62 While it is certainly more discomforting to have a house
searched, that is due at least in part to the greater potential for revelation of
personal information, as well as the violation of personal space. And private
correspondence, for example, could be received and held at a place of business.
The more obvious difficulty is that declaring one place safe invites the
secreting of material there. This problem should not be overstated. It would
be impossible for a business to move its entire records into homes, and selective moving would surely create enough reasonable suspicion, especially if the
omissions followed a pattern, to satisfy the stricter warrant requirements. A
greater problem would be posed by small family businesses or sole proprietorships. Nevertheless, it should be possible to arrive at a more accurate test for
a "business papers rule," though this one does have some important benefits.
Another option is to make the rule hinge on the type of entity that owns
the documents. The basic distinction here would be between natural persons,
who would receive full protections, and corporations, which would receive
minimal protections. The corporate persona has none of the attributes of personality to which important privacy values attach. While privacy may be valuable
to the corporation, it is still in essence a profit-making machine using privacy
only as a means of economic gain.' 63 Because corporations are voluntary associations, receive special privileges, and indeed are created only by law, as a
constitutional matter they do not have the same privacy rights as natural
persons. 6 Thus, as a line, corporateness is attractive because it would fit fairly
easily into current constitutional doctrine.
A further virtue of this line is that it is fairly accurate in attacking only
white collar crime. The corporation is the pervasive form of doing business
on any sort of scale, and it is in large scale business that the concealingby-intermingling problem is most acute. Furthermore, it would serve the
employee-employer distinction urged above with relation to salary information on tax returns.
65
"'For a more extensive discussion of this distinction, see infra text accompanying notes 301-14.
'61Cf. Katz, 389 U.S. at 351 ("For the Fourth Amendment protects people, not places.").
'6Bell v. Maryland, 378 U.S. 226, 245-46, 262-66 (1964) (discussion of the corporate personality).
'4CaliforniaBankers, 416 U.S. at 65-67; United States v. Morton Salt Co., 338 U.S. 632, 651-52 (1950).
It should be added that corporations do have fourth amendment rights, and it has been so held for nearly
a century. For a fuller discussion of the reasons for and the problems with this rule, see infra text
accompanying notes 279-86.
"sSee supra text accompanying note 153.
Fall, 19821
BUSINESS PAPERS RULE
However, this attempt to equate corporation with employer exposes the
clumsiness of this test. Not all corporations are businesses and not all businesses
are corporations. To take the first proposition first, non-profit corporations,
like the NAACP, implicate the very kinds of privacy with which this article
is concerned. Complete access to documents of non-business corporations would
reveal not only the "business side" of their operations but also the membership
lists, which are private.' 66 The second proposition is equally troubling. A great
deal of business capable of being involved with white collar crime is carried
on through partnerships or sole proprietorships. Not only would a corporate
line fail to pick those up, but it would encourage the use of noncorporate forms
of business associations in criminal ways, thus vastly increasing the amount
of business crime that the line misses. While the advantage of the corporate
form of doing business would remain, a large loophole in enforcement would
be created.
Nor would remedying this loophole by including partnerships be an
unmixed blessing. While it would partially close the loophole, it would also
destabilize the whole line because it destroys the corporate rationale. The
visitation rights of the state are based essentially on the voluntariness of joining
the corporate form and on the fact that the entity is purely the creation of
the state. 67 Neither of these are necessarily true of partnerships, which are often
constructive and do not give rise to liabilities very different from those that
18
would be imposed in the absence of a partnership.
Finally, it must be questioned how well a distinction based on the type
of owning-entity protects privacy. The real virtue of the place test was that place
is very important in one's expectations of privacy. The home is more private
than a business. The corporation test ignores the interest in limiting searches
of the home. Nor is ownership necessarily an obvious characteristic of a document, so rummaging would be necessary under such a test. So, in terms of what
it covers, the corporation test is too narrow, and in terms of where it covers,
it is too broad.
The corporation line might be refined by applying it to the type of document involved rather than the owning entity. First, one would determine one's
attitude toward each kind of entity, and then decide what sort of nexus with
the entity is required to characterize the document. It is not necessary to discuss
all of the possible combinations to show the strengths and weaknesses of this
test. Bank records are a good example. A bank, being a corporation, would
be an unprotected entity. A natural person who is a depositor would be protected. What is done with personal checks? Who has the dispositive nexus?
The Miller majority insisted that the bank is an active party in such transactions.
'NAACP v. Alabama, 357 U.S. 449 (1958).
''This theory will be discussed in more detail, see infra text accompanying notes 270-86.
6
' UNIF. PARTNERSHIP AcT, §§ 6, 7 (1969).
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The dissenters insisted just as cogently that it is not. 69 This is no way to
formulate a coherent privacy policy. Also, what sort of factors are to be used
in assessing nexus? Ownership of the piece of paper? Or does one simply say
(with the Miller majority) that exposure to an unprotected entity automatically
destroys protection?
What this discussion shows is that while these tests may correlate acceptably
with white collar crime and with privacy considerations, they fail to address
the real privacy issue - the contents of documents. While the type of entity
which produces or processes a document may give one a good idea of the privacy
of its contents, it is at best a rough approximation.
While it is clear that content is the ultimate privacy issue, there are problems with such a test. If asked why certain information is private, one would
be forced to look to other factors, such as the parties involved in the communication, who generated it, and who has access to it. Furthermore, privacy may
be amply protected by the fact that only partial information is available. As
a type of privacy, this idea has not yet been recognized by the courts. To use
the example of mail cover surveillance, the Ninth Circuit has held that, like
bank records, all expectations of privacy are lost completely by exposing the
information on the outside of an envelope to the U.S. Postal Service. 7 ' But
it should be obvious that one's correspondence is carried on in small, discrete
parts. "Privacy is not a discrete commodity, possessed absolutely or not at
all." ' 7' As Judge Hufstedler pointed out in United States v. Choate, "[W]hile
an individual may realize that an isolated piece of mail may attract the attention of postal employees, he knows that ordinarily no one would have the ability
or inclination to remember who writes to him." 72 It is incorrect to assume that
by exposure of isolated pieces of information one intends to expose an entire
pattern of activities.m"I
This distinction is also seen in tracking device (beeper) cases. While one
undoubtedly has no expectation of privacy in being sighted once by a single
individual or policeman while driving in one's car, the combination of all of
the sightings by all of the individuals who saw the car is another matter entirely.' 7
To argue that since each sighting is not private the total also is not is to ignore
why the tracking device was installed in the first place. The total route taken
"'Miller, 425 U.S. at 440, 449. Accord Fisher, 425 U.S. at 427 (Brennan, J., concurring and dissenting).
"'United States v. Choate, 576 F.2d 165 (9th Cir.), cert. denied, 439 U.S. 853 (1978).
" Smith v. Maryland, 442 U.S. at 749 (Marshall, J., dissenting).
'Choate, 576 F.2d at 202 (Hufstedler, J.,concurring and dissenting).
"'This failure to see that individual disclosure is not the same as general disclosure reflects a general disregard
of the principles of specificity in the fourth amendment. The Court recognized the problem of massive
collections of personal information, Whalen v. Roe, 429 U.S. 589, 605-06 (1977) (New York recorded,
interalia, names and addresses of physicians and patients dispensing and receiving dangerous but legitimate
drugs held constitutional but did not reach the issue in the absence of an actual public disclosure. Justice
Brennan, dissenting, found the issue dispositive, saying such collections in themselves violate privacy rights.
Id. at 606-07 (Brennan, J., dissenting).
"'The person driving circuitously to his destination so as to maintain his privacy is depending on the fact
that even hundreds of separate sightings, taken individually, do not undermine that privacy.
Fall, 1982]
BUSINESS PAPERS RULE
is in fact private, unless a surveillance device is used.' 75
What is being said is not that there is a theoretical reason that all of a
person's income could not be discovered from minimal-protection searches,
but that such a procedure would by very difficult and uncertain. When does
one know one has covered all sources? It would be far more efficient to use
the lower protection area to develop probable cause, and then examine personal
records under the full panoply of fourth amendment protections. In addition,
because a content-based test must examine content to determine protection, such a test itself defeats the protection. A broader, more workable rule
is needed.
The best test is one based on the type of transaction recorded or accomplished by the document in question. Only those transactions which record business
activities would be subject to lowered protection. All of the records of corporations, partnerships, and other business entities would be given lower protection, practically by definition. It would permit access to the records of an
individual, however, only to the extent that they represent the voluntary reaching
out by that individual to another entity (person or group) in a commercial
activity. Thus, records of purchases for personal use would receive higher protection, while purchases for manufacture or subsequent resale would receive
the lower protection. Money earned would be business-related for these pur17' 6
poses, therefore, basic employment information would be more accessible.
To return once again to the bank records example, the component parts
of such transactions can be easily separated. To the extent that a profit-making
activity is involved, such as the bank making use of its deposits or the depositor
earning interest, related records should be accessible. To the extent, however,
77
that records reflect only personal expenditures and receipts they are private. '
7 8 Bank records showing
In practical terms, this fits in with the totality idea.'
interest paid would be accessible, but it would only show part of an individual's
financial situation.
There are three important aspects of this rule which serve to protect privacy.
First, the transactions must involve a reaching out by the party to join the stream
of commerce. The Supreme Court has argued that anytime a person exposes
" United States v. Holmes, 521 F.2d 859, 866 n.13 (5th Cir. 1975). Indeed, the facts of Holmes deny
the visual contact theory. The plane which was monitoring the beacon "was never able to spot the van
visually." Id. at 861. In Holmes a tracking device was attached to a van suspected of transporting marijuana
and government agents used the device to follow the van to a shed where the marijuana was stored. Contra
United States v. Moore, 562 F.2d 106 (1st Cir. 1977) (agents used tracking devices attached to a car, a
van, and placed in a box of chemicals to find the location of a "factory" for controlled substances); United
States v. Hufford, 539 F.2d 32 (9th Cir.) cert. denied, 429 U.S. 1002 (1976) (tracking device attached
to a drum of caffeine to be used to produce illegal amphetamines).
"'6See supra text accompanying note 153. "[lit is difficult to see how the summoning of a third party,
i.e., the employer, and the records of a third party, can violate the rights of the taxpayer, even if a criminal
prosecution is contemplated or in progress." Donaldson v. United States, 400 U.S. 517, 537 (Douglas,
J., concurring).
"'See supra text accompanying notes 134-41.
"'See supra text accompanying notes 170-75.
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[Vol. 16:2
information to another person or business he "assumes the risk" that that person
will make it public.' 7 9 This is not entirely fair where the individual has virtually
no choice but to use services like telephones and banks.' I Under the business
papers rule the telephone company's records of income from sale of its services would not be protected because it is a business. However, the individual's
bills and toll records would be protected as private because they are not commerce but merely purchase of personal services.
Voluntariness cannot be the sole test here because earning a living is not
really voluntary, but this is unavoidable. Income information seems an
appropriate amount of access to permit because it is the closest to commerce
of personal transactions in that it is always carried on with a business entity
and with a profit motive, and because it is information which must be revealed
anyway for tax purposes.
A second key aspect of this rule is that less protection is only given to records
which involve transactions with others. This means that documents which are
created by oneself for one's own use are never accessible without at least the
fourth amendment safeguards.' 8 ' It also means that transactions like withdrawals
from one's own bank account would receive the higher protection.
The third aspect of this is that only business and commercial relationships
are subjected to more discretionary scrutiny. These are areas in which people
have the least expectation of privacy. In economic areas the government has
traditionally exercised greater visitorial powers because of its great interest in
economic regulation. Also, commercial ventures cannot be truly private, as they
necessarily involve the participation of other persons or institutions. In sum,
the business papers rule protects the most private matters, makes accessible
at least private matters, and provides a standard for separating out mixed
transactions.
The process for applying the business papers rule would have three basic
components: an administrative warrant system for business papers; a per se
classification regarding certain business entities and certain noneconomic private
papers; and an intermingled documents procedure to handle the difficult cases.
As a threshold matter, a subpoena should always be preferred to a search
warrant. With or without the business papers rule, the relevance requirements
of a subpoena are very relaxed.'" 2 While there is no consitutional requirement
to prefer a subpoena,' 3 as a matter of general privacy policy it is preferable
not to use searches. There are situations, however, where the possibilities of
destruction or apparent noncompliance make a subpoena inappropriate.
"'United States v. Miller, 425 U.S. 435 (1976).
"'Smith v. Maryland, 442 U.S. at 750 (Marshall, J., dissenting).
"'Fifth amendment protection will be discussed later, see infra text accompanying notes 223-60.
"'Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 208 (1946).
"'See supra notes 92-93.
Fall, 1982]
BUSINESS PAPERS RULE
The administrative search warrant is the lower standard of protection
granted to business papers. Rather than being based on a strict probable cause
standard, an administrative warrant is based on a need to inspect and an
administrative procedure which reasonably indicates that this particular place
is a proper subject of inspection.'8I Thus, classification as business papers would
not make documents public records at all, nor would they be available simply
at the government's whim. '8 They would, however, be available through a
warrant procedure based on a showing of reasonableness. Reasonableness in
this context would involve consideration of the various factors suggested above
as criteria for the rule, including particularity and the need for such surveillance,
as applied to the administrative procedures used to determine the target of the
search.', 6
In a bribery case, for example, it might be discovered that a particular
contractor was getting all of the business of a particular agency. This would
be reason to look more closely, but it hardly rises to the dignity of probable
cause in a particular case. If, upon inspecting the business papers, evidence of
cash generation were found, then real probable cause would be created to inspect
personal records. The role of the administrative warrant would be to provide
access to less private records as a way of confirming or refuting suspicions based
on weak evidence.
An initial problem in the warrant process will be the classification of the
subject documents as business or personal. 8 " The applicants for a warrant
would have to supply affidavits containing sufficient information for the
magistrate to classify the documents. And because an intermingled documents
procedure is available in cases of doubt, mistakes should be subject tosuppression. To avoid resort to the intermingled documents procedure in all
cases, however, a policy should be established that records which are owned
by or in the custody of a corporation or partnership and are kept at its place
of business are per se business papers, unless the subject entity can show
otherwise. 88 Sole proprietorships would be a somethat more difficult problem,
but the existence vel non of a separate place of business should in most cases
indicate that the papers are a business record. Conversely, there would be a
per se rule that documents in the home or in a personal safe deposit box, if they
are to be obtained by a search at all, must go through the intermingled documents
procedure. By putting the burden on the object of the search in the clearer cases,
the use of an exclusionary rule would not unduly intimidate the government
from obtaining business paper warrants. In case of a dispute, the intermingled
documents procedure would be used.
"'Marshall v. Barlow's, Inc., 436 U.S. 307, 320 (1978). Barlow's follows the two basic cases in the field:
Camara v. Municipal Court, 387 U.S. 523 (1967); See v. City of Seattle, 387 U.S. 541 (1967).
" Barlow's 436 U.S. at 323.
"'SeeCamara, 387 U.S. at 537.
I'See supra text accompanying notes 176-81.
."This adopts the place and custody tests suggested above to the extent that they are feasible, using the
clearest rule where possible.
[Vol. 16:2
AKRON LAW REVIEW
Where a broad, clear, easily administered rule will not work, the use of
the corollary intermingled documents procedure eliminates the need to use several
different but inadequate rules for these documents. The clearest statement of
such a procedure is in the Model Code of Pre-Arraignment Procedure
(hereinafter Model Code).I 9 The Model Code anticipates that the intermingled
documents provision will be used to keep a search within the scope of the preexisting warrant. 190 Here, however, where the scope is not likely to be limited
very much, the procedure will be used to determine what documents are sub9
ject to lesser protection, that is, where scope is not important.' '
The Model Code procedure, as applied here, would require that wherever
an investigator could not satisfy the issuing magistrate that only business papers
would be found, or wherever an investigator inadvertantly came across personal papers, to the extent that the investigators could not classify the papers
without examining the content of the papers, the papers would be sealed and
returned to the issuing magistrate who would hold an adversary hearing to deter92
mine which documents would be classified in what way. The magistrate would
then separate the documents to the extent possible and impose appropriate
19
limitations' 93 on the search of those few that are not separable.
"'MODEL CODE OF PRE-ARRAIGNMENT PROCEDURE,
§§
SS 2202(4) & SS 220.5 (1975) [hereinafter cited as
MODEL CODE].
"Id. at § SS 220.5(2).
"'This is not to suggest that the MODEL CODE intermingled documents rule should not be embraced for
fourth amendment searches. While the conduct of these is generally beyond the scope of this article, it
is entirely consistent with the attempt to limit unnecessary discretion in the conduct of searches by law
enforcement officers.
2
' The text of the MODEL CODE proposal states:
(2) IntermingledDocuments. If the documents to be seized cannot be searched for or identified
without examining the contents of other documents, or if they constitute items or entries in account
books, diaries, or other documents containing matter not specified in the warrant, the executing
officer shall not examine the documents but shall either impound them under appropriate protection
where found, or seal and remove them for safekeeping liepding further proceedings pursuant to
Subsection (3) of this Section.
(3) Return of IntermingledDocuments. An executing officer who has impounded or removed
documents pursuant to Subsection (2) of this Section shall, as promptly as practicable, report the
fact and circumstances of the impounding or removal to the issuing official. As soon thereafter
as the interests of justice permit, and upon due and reasonable notice to all interested persons,
a hearing shall be held before the issuing official or, if he have no jurisdiction, before a judicial
officer having such jurisdiction, at which the person from whose possession or control the documents
were taken, and any other person asserting any right or interest in the documents, may appear,
in person or by counsel, and move (a) for the return of the documents under Article 280 hereof,
in whole or in part, or (b) for specification of such conditions and limitations on the further search
for the documents to be seized as may be appropriate to prevent unnecessary or unreasonable invasion
of privacy. If the motion for the return of the documents is granted, in whole or in part, the documents
covered by the granting order shall forthwith be returned or released from impoundment. If the
motion is not granted, the search shall proceed under such conditions and limitations as the order
shall prescribe, and at the conclusion of the search all documents other than those covered by the
warrant, or otherwise subject to seizure, shall be returned or released from impoundment.
MODEL CODE, supra note 189, at § SS 220.5(2)-(3).
" The Reporter's Note suggests searches by an independent party, in the presence of counsel, and other
possible limitations.
MODEL CODE.
supra note 189, at § SS 220.5,
REPORTER'S NOTES.
"'Given the nature of the business papers rule, this is unlikely to be large amounts of materials. Almost
by definition, business papers are those papers, or copies, which have been physically used in commerce.
Fall, 19821
BUSINESS PAPERS RULE
The courts have not always been entirely sympathetic to the problem of
intermingling. An early Supreme Court case dismissed the problem of irrelevant entries as inevitable in the nature of business records.' 95 More recently,
the wiretapping problem of obtaining irrelevant personal phone calls was held
not to be a constitutional problem. "[Tihe interception of private conversation which occurred in this case was the inevitable consequence of the decision
96
of the appellants to intermingle their private lives and their narcotics activities." I
This is hardly satisfying because it presumes guilt as the basis of the search.
It is backwards reasoning. An equally disturbing doctrine would permit the
admission of other items in the same file or book as those for which there was
a warrant on a plain view theory.' 97
A more sensitive approach was taken by Judge Gurfein in United States
v. FirstNationalCity Bank, 9 a case involving a warrant to search a safe deposit
box. While the warrant was not overbroad in its search for seizable assets (by
IRS levy), it was too broad for the purpose of going through private papers
to find them.' 99 Judge Gurfein recommended that a procedure like the Model
Code's be used.2"' The Supreme Court has indirectly asserted the value of such
°
a system for protecting privacy. In Nixon v. Administratorof General Services" '
the Court held that the intermingling of personal papers with presidential papers
was not a bar to placement in the National Archives because government
archivists, who have an excellent reputation for confidentiality, could sort out
the private papers, because of the limited intrusion involved, and because the
private papers were a miniscule proportion of the total collection. 2
The cases demonstrate that an intermingled documents procedure is both
necessary to prevent the abuse of the plain view doctrine and effective in limiting
such intrusions. Thus, the business papers rule provides a single standard
for determining access to documentary evidence of white collar crime, and,
through an intermingled documents procedure, avoids a rule which is too general
to be accurate or too specific to be workable.
B. The PracticalEffect of the Business Papers Rule
The practical impact of the business papers rule has three aspects: the
improvement of enforcement efforts; the stabilization of privacy rights; and
the workability of the distinction between business and private papers.
The business papers rule will improve law enforcement access to
"'United States v. First National Bank of Mobile, 295 F. 142, 143 (S.D. Ala. 1924), aff'd per curiam,
267 U.S. 576 (1925).
" United States v. Turner, 528 F.2d 143, 159-60 (9th Cir. 1975).
1"Beusch, 596 F.2d at 877.
'568 F.2d 853 (2d Cir. 1977).
'"Id. at 860-61 (Gurfein, J., concurring and dissenting).
20
°1d. at 861 n.3.
2 '433 U.S. 425 (1977).
101d. at 462.
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[Vol. 16:2
documentary evidence relevant to white collar crime, particularly at the initial
stages of detection and investigation when probable cause is virtually impossible to obtain. This can be demonstrated in the four crimes described at the outset.
Bankruptcy fraud necessarily involves a business and its business relations
primarily with other businesses. While hidden assets may eventually be found
in private accounts, the major part of the transactions will be to and from various
business entities. The individual in these cases is holding himself out to commerce. Obviously, the bankrupt's own records are open to the trustee supervising the proceeding.20 3 Beyond that, the building up of assets, the obtaining
of credit, and the unloading of some assets can be traced through business
records. Thus, without needing an informant or a clear inconsistency in the
bankrupt's books, the police will be able to confirm or refute any suspicions
they have which are otherwise raised. Having put together the relevant business
transactions, and at least one end of the personal transactions, the investigators
are in a good position to find or not to find probable cause to obtain a warrant
to examine the personal records of some of the persons involved for particular
crimes and particular records.204 The immediacy of the original access will limit
the problem of destruction of relevant materials.
In bribery cases, as noted, investigators are usually looking for income
to individuals and expenditures by businesses. Having initial suspicions based
on noneconomic indicators, like repeated awards of contracts to an undistinguished or incompetant firm, the business papers rule would allow investigators immediate access to such a firm's records. These may well be the
most probative anyway, since the cash income to the official may never appear
in his records while expenditures must appear in the records of the business.
At this stage the search is for signs of cash generation. Travel, phone, and entertainment logs can be correlated with the cash generation and with stages in the
contract process.20 5 Again, it is not necessary to have proved the case by this
point. The information gathered in this period will provide probable cause for
the issuance later of specific warrants for private documents. Thus, searches
of personal records will be limited to important instances and the government
will have the information necessary to make more particular requests.
This final point is worth noting. Up to now it might have been assumed
that the widening of governmental surveillance at one point was a diminution
of privacy in general. From this example, however, it is apparent that diminution of privacy in one area can increase it in another because later requests for
more intrusive searches can be made with more particularity regarding the objects
of the search. And if the privacy expectations in the two areas are quite different, sacrificing some of the less private to help the more private is a very
20311
2
U.S.C. § 521(3) (Supp. IV 1980).
'This is an excellent place for the MODEL CODE procedures to be used for a high protection search. See
supra note 191.
20
'SPECIAL COMMISSION REPORT, supra note 10.
Fall, 19821
BUSINESS PAPERS RULE
good trade-off. In the case of cash generation by paying bonuses which are
cashed and then returned, the checks themselves might actually say "cash" on
them, or "for deposit only" in the opposite instance, but a limited examination of the employee's deposits in that time period would clearly indicate how
the check was handled.
Embezzlement by self-dealing and theft would also be significantly easier
to investigate with the business papers rule. Presumably the victimized bank
would make its records available anyway, but if it did not the business papers
rule would make them available. The only records so released would be of the
transactions to which the bank is an active party, such as making loans, paying
interest, assessing service charges, making investments, and the like. At this
point personal accounts would be excluded. An examination of these transactions will reveal much, since the ability to embezzle or self-deal comes from
the power to approve bank financial actions, and approval is seldom needed
for the virtually automatic saving and checking functions. To the extent that
an investigation of bank documents reveals any significant involvement with
particular businesses, the business papers rule would permit examination of
the records of that business to determine whether a bank official had an interest
in it.
Eventually, of course, resort would be necessary to the personal accounts
of the suspect bank officials, but there is nothing objectionable about this. The
key is that a foundation for investigation has been built in terms of probable
cause for specific materials. The purpose of the business papers rule is not to
remove things from scrutiny altogether, but to order the investigation in such
a way as to limit discretionary invasions of privacy.
It was noted earlier that one possible solution to the conflict between law
enforcement and privacy goals in white collar crime prosecution is simply to
accept the fact that we cannot combat some crimes in a proactive manner.2" 6
Personal income tax evasion comes closest to this situation under the business
papers rule, although active investigation is by no means precluded. The taxpayer is required by the Internal Revenue Code to have documentation to support returns filed.2"' Income records, under the business papers rule, are not
a problem; since they involve business, the lower-standard access seems
reasonable.
Support for deductions and credits and exemptions, however, tends to
expose a great deal of personal information, much of the type considered extremely private.2"' Finding this objectionable, however, mistakes the scope of
documentation required and the status of deducations. If one wants privacy
2
'See supra text accompanying notes 114-20.
20'26 U.S.C. § 6001 (1976 & Supp. IV 1980). This includes records "sufficient to establish the amount
of gross income, deductions, credits, or other matters required to be shown by such person in any
" Treas. Reg. § 1.6001-1(a), (b) (1982).
return ....
.. 'For example, political and charitable contributions.
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[Vol. 16:2
that badly, he can either not claim deductions or stay within the zero-bracket
amount."0 9 As to scope, it would seem that a receipt or a single cancelled check
would be sufficient for these purposes. 2 1° That should be all that is available
to the I.R.S. on an administrative warrant basis, as it currently is under a civil
summons provision with requirements similar to an administrative warrant. 21
The familiar pattern then takes over. If audit of those materials reveals
serious discrepancies or omissions, the I.R.S. will be in a position to establish
probable cause for a more specific search. Specificity may not be possible if
under-reporting of gross income is at issue and the "net worth" or other indirect method is to be used. However, presumably the I.R.S. would not leap
headlong into such a broad search without first making more limited inquiries
in search of more direct evidence. If no such evidence were found to exist, and
suspicion still remained, then only as a last resort would this very broad search
be authorized.
In personal income tax evasion cases, the business papers rule adds less
to the law enforcement arsenal than it does in the case of other crimes. But
this is as it should be. A due concern for privacy clearly distinguishes personal
tax evasion from other white collar crimes because it is so much more intimately
related to the individual's private life. Nor is this a minor sacrifice. Personal
income tax evasion is a serious problem. But the business papers rule is a tradeoff, not a mutual maximization of goals, and some sacrifice is to be expected
somewhere.
In analyzing the effect of the business papers rule on privacy, the most
important thing to note is that the expanded access at the intitial stages of the
investigatory process actually expands privacy in the more personal areas. By
mandating a step-by-step process, beginning with the least private material and
building a foundation for access to the most private, the resulting intrusions
are more specific and more necessary.
The personal papers kept at home or in a safe deposit box, and personal
transactions, are protected from general searches based on mere suspicion. This
protection is accomplished, as has been seen, by the substantive scope of the
rule. It is also accomplished by the procedural aspects of the rule, most notably
the intermingled documents procedure. The latter is not simply a gloss on the
substantive rule. It is inherent in any content-based, document-specific
standard. I 2
Finally, nothing in the business papers rule suggests that any eviden2O26
U.S.C. § 63(d) (1976 & Supp. IV 1980). The amount is presently $2300 for an individual and $3400
for a joint return.
2
"'The regulations only specify "sufficient to establish." Treas. Reg. § 1.6001-1(a) (1982).
-,26 U.S.C. § 7602 (1976) gives general authority to examine records and books and issue summonses.
See infra text accompanying notes 325-27.
2'"The per se rules as to place of documents are designed to ease administration; they are not implicit
in the rule.
Fall, 1982]
BUSINESS PAPERS RULE
tiary privileges should be affected. Foremost is the fifth amendment privilege
against self-incrimination. As it provides a basis for the privacy policies upon
which the business papers rule relies, it can hardly be inconsistent with the
rule. In the business papers scheme it is seen as an absolute privilege against
3
revelation of certain of the most private documents. I In sum, a salutary effect
on privacy is achieved by designating personal privacy more important than
business privacy and then making access more difficult to materials whose content, rather than their location or contacts, is most private.
A final question must be whether the distinction between business and personal documents will work or whether it will become the subject of endless,
self-defeating litigation. The distinction between personal and business activities
is hardly unknown to the law.2" 4 The Internal Revenue Code makes this distinction for very different purposes and in different ways than the business papers
rule does, but the fact that it makes these distinctions and they work is
2 '
encouraging and some of the concepts will provide guidance.
The first relevant Code classification describes "personal, living, or family
These are expenses which may be called
expenses" which are never deductible.'
"of a character applicable to human beings generally, and which exist on that
2
plane regardless of the occupation." "' A second concept is that "the origin
and character of the claim with respect to which an expense was incurred, rather
than its potential consequences upon the fortunes of the taxpayer, is the controlling basic test of whether an expense was business or personal .... 28 The
I.R.S. then draws a line between personal expenses and those "for the production or collection of income. "29 This is not at all unlike the line drawn by the
business papers rule which permits easy access to personal income records but
22 0
not to personal expenditures.
The most directly relevant line drawn by the Code defines expenses incurred
in a "trade or business." 2 ' Justice Frankfurter described trade or business best
saying it "involves holding one's self out to others as engaged in the selling
"'See infra text accompanying notes 223-60.
'"The distinction is also recognized as a constitutional matter. See infra text accompanying notes 223-355.
21 26 U.S.C. § 162 (1976 & Supp. IV 1980).
2'"26 U.S.C. § 262 (1976). Treas. Reg. § 1.262-1(b) (1982) provides several examples of such expenses
like life insurance, personal residence, personal travel, most education, and maintaining a household.
"'Henry Smith, 40 B.T.A. 1038 (1939), aff'd per curiam, 112 F.2d 114 (2d Cir. 1940) (child care). This
rationale sustains similar findings as to commuting, see Comm'r v. Flowers, 326 U.S. 465 (1945); Rev.
Rul. 432, 1975-2 C.B. 6, and home offices, see Bodzin v. Comm'r, 509 F.2d 679 (4th Cir.), cert. denied,
423 U.S. 825 (1975).
"'United States v. Gilmore, 372 U.S. 39, 49 (1963) (divorce litigation expenses not deductible, though
involving ownership of certain assets).
'26 U.S.C. § 212 (1976). For useful examples, see Treas. Reg. § 1.212-1(f) (1982). The opposite category
is activities not for profit. 26 U.S.C. § 183 (1976); Treas. Reg. § 1.183-2(a), (b) (1982).
'See supra text accompanying notes 176-78.
"'This distinction is crucial in 26 U.S.C. §§ 162 (1976 & Supp. IV 1980) (general deduction), 165 (1976)
(losses), 166 (1976 & Supp. IV 1980), 167 (1976 & Supp. IV 1980) (depreciation), 280A (1976 & Supp.
IV 1980) (residence), 1221(l) (1976) (definition of capital assets).
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[Vol. 16:2
of goods or services. ,,22 It is this characteristic of actively going out into the
world, with the exception that Frankfurter does not include employment, that
the business papers rule tries to capture as its soul.
As a practical matter it can be concluded that the business papers rule
would give important additional tools to law enforcement efforts against white
collar crime and would at the same time provide better privacy protections for
the individual. Further, there is good reason to believe that the test involved
is capable of sufficient clarity that it will not be bogged down in endless litigation. Without these characteristics, it would be pointless to adopt a new standard
at all.
C. The Business Papers Rule and the Constitution
The business papers rule is not, and is not intended to be, capable of
simple legislative or judicial implementation. However, many aspects of the
business papers rule have a strong constitutional basis or are at least consistent with the constitutional scheme for personal privacy.
The fifth amendment privilege against self-incrimination2 23 is considered
a personal privilege and so fifth amendment doctrine has long recognized a
distinction between business and personal papers. It is well settled that a corporation cannot claim the privilege, 22 ' and it follows that an individual cannot
assert the privilege in the records of a corporation. 2 5 In applying this rule the
court is governed by the "nature" of the documents, not merely their possessor
or custodian. 2 6
On this rationale, the rule was first expanded to cases where the person
claiming the privilege was sole owner and officer of the corporation 22 7 or sole
owner and professional employee of a professional corporation, 22 and then
to unincorporated associations. 22 9 Recently, the Supreme Court in Bellis v.
United States230 held that to the extent that a partnership is an independent
122Deputy v. DuPont, 308 U.S. 488, 499 (1940) (Frankfurter, J., concurring). The Court itself distinguished
the business of the taxpayer's employer and of the taxpayer himself. Id. at 494. See also Lee, A Blend
of Old Wine in New Wineskins: Section 183 and Beyond, 29 TAX. L. REV. 347, 452-54 (1974) (a useful
discussion of the limitations of this concept).
"'For text of the amendment, see supra note 66.
1"Couch,
409 U.S. at 327; United States v. White, 322 U.S. 694, 698-99 (1944). See also Hale v. Henkel,
201 U.S. 43, 69 (1906); County of San Mateo v. Southern Pacific R. Co., 13 F. 722, 746 (Cir. Ct. D.
Calif. 1882) (Field, Cir. J.).
"'Curcio v. United States, 354 U.S. 118, 122 (1957) (union records); United States v. White, 322 U.S.
694, 704 (1944) (labor union); Wilson v. United States, 221 U.S. 361, 376-77 (1911) (president of corporation
had no privilege even though the documents were kept by him for his almost exclusive use).
116Grant v. United States, 227 U.S. 74 (1913) (look at nature and not the possessor of documents); Wheeler
v. United States, 226 U.S. 478, 490 (1913) (dissolution of corporation and subsequent possession of its
documents by defendant does not change their "nature"); Drier v. United States, 221 U.S. 394, 400 (1911)
(companion case to Wilson); Wilson v. United States, 221 U.S. 361 (1911).
"'Fineberg v. United States, 393 F.2d 417, 420 (9th Cir. 1968).
"'Reamer v. Beall, 506 F.2d 1345, 1346 (4th Cir. 1974), cert. denied, 420 U.S. 955 (1975).
"'Brown v. United States, 276 U.S. 134, 142 (1928).
"M417 U.S. 85 (1974).
Fall, 1982]
BUSINESS PAPERS RULE
entity, its records cannot have a fifth amendment privilege."' The "business
papers rule" is consistent with Bellis in cutting through mere form of the business
" and in
entity by examining its separateness as an entity from its members,
33
demanding a clear showing of these things prior to access.
At the same time, however, the Supreme Court has narrowed severely the
extent to which the privilege applies to documents which are owned and in the
custody of an individual natural person. Indeed, the Court has narrowed the
privilege to a point where it may no longer cover the contents of any documents
but only the method of obtaining them. 3 Up to Bellis, it was assumed that
23 5
a sole proprietor could not be forced to surrender his records, based on the
36 which dealt with business records and
2
landmark Boyd v. United States
37
established that documents can be testimonial in the fifth amendment sense.
23
The first break in this doctrine came in Couch v. United States, which
held that a sole proprietor's records, to which the proprietor had title, in the
possession of her accountant were not protected because possession and not
9
ownership is the key to fifth amendment protection.23 In Fisher v. United
23
Bellis v. United States, 417 U.S. 85, 95-97 (1974).
1d. at 95-98. The Court considered Pennsylvania partnership law, the partnership's employees, existence
of bank accounts, responsibilities of owners, among other things.
The group must be relatively organized and structured, and not merely a loose, informal association
of individuals. It must maintain a distinct set of organizational records, and recognize rights in
its members of control and access to them. And the records subpoenaed must in fact be organizational
records held in a representative capacity.
Id. at 92-93. The test was also formulated in an earlier case:
The test, rather, is whether one can fairly say under all the circumstances that a particular type
of organization has a character so impersonal in the scope of its membership and activities that
it cannot be said to embody or represent the purely private or personal interests of its constituents,
but rather to embody their common or group interests only.
United States v. White, 322 U.S. 694, 701 (1944).
232
33
' Bellis, 417 U.S. at 93.
"'As a doctrinal matter, the Court has chosen to view the fifth amendment as a privilege against producing
but not against production. See Johnson v. United States, 228 U.S. 457, 458 (1913). Therefore, the emphasis
shifts to the compulsion issue and the question of what is testimonial. See Schmerber v. California, 384
U.S. 757, 768 (1966) (the fifth amendment applies only to communicative acts). See also Note, Supreme
Court Delineatesthe Relationship Between the Fourth and Fifth Amendments, 1967 DuKE L.J. 366 (1967).
In Andresen the Supreme Court states that papers (voluntarily written prior to the search) are no different
than other tangible evidence and that the fifth amendment requires only that the holder cannot be physically
compelled to produce them himself. The police, however, may seize them, against the holder's will, with
a warrant. 427 U.S. at 474. While the case law has not extended the Andresen rationale so far, for the
view that such extension is unavoidable, see Note, supra note 152, at 979.
'"Bellis, 417 U.S. at 87-88.
23416 U.S. 616 (1886).
237116 U.S. at 633.
38409 U.S. 322 (1973).
."Couch, 409 U.S. at 330-33, 336. Accord, Meister v. Comm'r, 504 F.2d 505 (3d Cir. 1974), cert. denied,
421 U.S. 964 (1975) (sole proprietor's records were stolen by bookkeeper and were discovered upon death
of bookkeeper). At this point the Court still maintained a zone of privacy, and Justice Brennan was able
to assert that safe deposit boxes and personal papers were left protected. Couch, 409 U.S. at 357 (Brennan,
J., concurring). Justices Douglas and Marshall dissented, asserting that the Court had abandoned privacy
as a rationale. Id. at 340-42, 349-51. (Douglas and Marshall, JJ., dissenting).
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States2 " ' the Court explicitly abandoned the privacy basis of the fifth
amendment,2"' holding that virtually regardless of what the documents
contained2 "2 the fifth amendment is not implicated unless the holder of the
privilege is personally compelled to produce them. While Fisher expressly
declined to decide whether a taxpayer's own records would be protected, there
is reason to believe that they no longer are.24 3 Commentary, and at least one
case, have suggested that after Fisherpapers of all kinds are only covered when
the "actual preparation of the documents or the making of the written declarations which they contain [have] been compelled.1 214 Finally, in Andresen v.
Maryland 4 5 the Court held that a search warrant does not constitute compulsion in fifth amendment terms where the individual voluntarily prepared the
documents and was not forced in his person to authenticate them.24 6 Papers
are tangible objects like any other piece of evidence.24 7
The concurrences and dissents of Justices Brennan and Marshall in
24 9 and Andresen2 5 suggest an alternative theory of the fifth
Couch, 28 Fisher,
amendment privilege based on the type of document, which correlates better
to privacy interests than the existence vel non of compulsion. The theory
distinguishes between business and private papers, and it has its origins in the
25
earlier United States v. White. '
The scope and nature of the economic activities of incorporated and
unincorporated organizations and their representatives demand that the
constitutional power of the federal and state governments to regulate those
activities be correspondingly effective. The greater portion of evidence of
wrongdoing by an organization or its representatives is usually to be found
2 425 U.S. 391 (1976).
2
,4'd.at 400. See Note, The Rights of CriminalDefendantsand the Subpoena Duces Tecum: The Aftermath
of Fisher v. United States, 95 HARV. L. REV. 683, 683-85 (1982).
2'4425 U.S. at 397, 402, 409-13. So, when the documents are in someone else's possession, the holder of
the privilege isn't personally compelled. Fisherinvolved accountant's work papers in the hands of the
defendant's attorney. Of course, privileged material given to the attorney stays privileged, id. at 404-05,
but here the documents themselves were not privileged. Id. at 409.
2
"Id. at 414. Justice Brennan speculated that this might be the case. Id. at 415 (Brennan, J., concurring
in the judgment).
1"Fagan v. United States, 545 F.2d 1005, 1007 (5th Cir. 1977). See Note, supra note 152, at 978-79; Note,
supra note 241, at 685, 692.
2 427 U.S. 463 (1976).
2
'61d. at 473, 477. For the prior, and opposite, rule, see Hill v. Philpott, 445 F.2d 144 (7th Cir.), cert.
denied sub nom., 404 U.S. 991 (1971).
111427 U.S. at 474. This, of course, is entirely inconsistent with Boyd.See Note, supra note 241, at 692-94;
Note, The Life and Times of Boyd v. United States (1886-1976), 76 MICH. L. REV. 184 (1977). For two
practical guides to the current state of the law, see Van Wert, Tax Frauds and the Government's Right
of Access to Taxpayer's Books and Records, 5 PEPPERDINE L. REV. 403 (1978); Note, Business Records
and the Fifth Amendment Right Against Self-Incrimination, 38 OHIO ST. L.J. 351 (1977).
208409 U.S. at 377-38 (Brennan, J., concurring); id. at 344-51 (Marshall, J., dissenting).
219425 U.S. at 414-30 (Brennan, J., concurring in the judgment); id. at 430-34 (Marshall, J., concurring
in the judgment).
250427 U.S. at 484-93 (Brennan, J.,dissenting); id. at 493-94 (Marshall, J., dissenting).
25322 U.S. 694 (1944).
Fall, 19821
BUSINESS PAPERS RULE
in the official records of that organization. Were the cloak of the privilege
to be thrown around these impersonal records and documents, effective
enforcement of many federal and state laws would be impossible.2 5 '
Justice Marshall argued that business papers are "impersonal" in contrast to
diaries and the contents of safe deposit boxes. 2" Justice Brennan, emphasizing an inviolate zone of privacy, attempted to define private papers on a spectrum from state-created documents like drivers' licenses, through business
records, nonbusiness economic records, and letters, and finally to diaries.2"4
He concurred in Fisher precisely because the documents sought there were
"wholly business rather than personal" and so did not implicate the fifth amend255
ment's zone of privacy.
The Andresen Court itself acknowledged that the fifth amendment protects privacy "to some extent," but permitted the search of an individual's office
for business records.256 While this might be seen as the establishment of a private
papers category, the distinction does not flow necessarily from the Court's logic
and so cannot be given far-reaching significance.
A privacy basis for the fifth amendment privilege is most compatible with
the business papers rule. The line should be drawn to protect letters and
diaries but not economic records. More than just business papers (in the sense
they have been defined here) should be excluded from the fifth amendment
privilege because the privilege would entirely bar certain evidence rather than
simply demand a stiffer procedure to get it. "Nonbusiness economic records
in the possession of an individual, such as cancelled checks or tax records, would
also seem to be protected. They may provide clear insights into a person's total
lifestyle." 2 57 While such records certainly require strict probable cause and particularity standards, they do not demand entire exclusion.
The Government has argued for such a line in some recent First Circuit
cases. Following the logic of Couch, Fisher, and Andresen, the Government
suggested that the fifth amendment now affects only "the mechanism of...
production" of papers and not the nature of such papers.25 Rather than urging
that position, however, it suggested a distinction based on the business records
exception to the hearsay rule.259 Noting that in Fisher the Court hinted that
there may be a different treatment of diaries, the Government suggested that
252
1d.
"'Couch, 409 U.S. at 349-51 (Marshall, J., dissenting); Blank, 459 F.2d at 386-87.
214Fisher, 425 U.S. at 426-27 (Brennan, J., concurring in judgment).
1"Id. at 414.
"6Andresen, 427 U.S. at 477.
117Fisher, 425 U.S. at 427 (Brennan, J., concurring in judgment). Justice Brennan would also have sole
proprietorships covered by the fifth. Id.
' 'Brief for Appellant at 15, United States v. John Doe, Witness, 628 F.2d 694 (lst Cir. 1980).
"'FED. R. EVID. 803(b).
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conducted
"business papers made and kept in the ordinary course of a regularly
6
business activity" should be available through subpoena.1 1
Thought and expression are at the core of the personality and so the
Supreme Court has protected the privacy of thought and expression where lack
of privacy will interfere with or discourage the exercise of first amendment
rights.26 1 The need for privacy in association is one of the main reasons for
classifying personal checks as private papers rather than as business papers.
Checks not only reveal political and religious beliefs and associations, but they
may also "provide clear insights into a person's total lifestyle, '2 62 which is a
first as well as fifth amendment concern.
The private reading of pornographic material in one's own home is
protected on first amendment grounds. 263 The relationship between the first
and fourth amendments has been noted in the context of the particularity requirement of the fourth amendment.
The general requirement of particularity in warrants is more strictly
applied in situations involving the seizure of materials which arguably fall
within the First Amendment's protection of free expression. This is
necessary to guard against an executing officer's seizing "protected
expression," if he is not given some guidelines to direct his exercise of
discretion26
Thus, where the privacy of personal papers has been needed to protect first
amendment rights, the Court has been willing to protect that privacy, at least
to a certain extent.
In the context of expression, however, the Court has not limited first amendment rights of corporations,16 so it is hard to tell as yet whether the existence
of a business makes a difference to first amendment doctrine in relation to
privacy. The only clue might be that Chief Justice Warren made a major distinction between business and personal activities in the first amendment pornography
2
1*Brief for United States at 14 & n.19, United States v. John Doe, Witness, 628 F.2d 694 (1st Cir. 1980).
The First Circuit took the position that while business records do not enjoy fifth amendment protection
based on their contents, the sole proprietor has a fifth amendment privilege against himself producing
them in response to a subpoena. Doe, 628 F.2d at 695 (relying on In re Grand Jury Proceedings (Martinez),
626 F.2d 1051 (lst Cir. 1980)). Two recent notes suggest a similar line, urging absolute protection for
"a core of one's expressions and effects" "intimately related to the private aspect of personality," and
emphasizing the privacy of diaries and letters. See Note, supra note 152, at 985, 988-99; Note, supra note
241, of 694-702. A three-tiered approach, business, personal, and privileged, similar to the business papers
rule is suggested in Comment, Papers, Privacy and the Fourth and Fifth Amendments: A Constitutional
Analysis, 69 Nw. U.L. REV. 626, 648-49 (1975).
"'NAACP v. Alabama, 357 U.S. 449 (1958). See also L. TRIBE, AMERICAN CONSTITUTIONAL LAw 702
(1978); Recent Developments, 24 VILL. L. REV. 786, 787-88 (1979).
"'See supra note 159.
"1'Stanleyv. Georgia, 394 U.S. 557 (1969).
'"United States v. Manarite, 314 F. Supp. 607, 610 (S.D.N.Y. 1970) (footnote omitted), aff'd, 448 F.2d
583 (2d Cir.), cert. denied, 404 U.S. 947 (1971). See also United States v. Marti, 421 F.2d 1263 (2d Cir.
1970); Marcus v. Search Warrant, 367 U.S. 717 (1961).
"'First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978).
Fall, 1982]
BUSINESS PAPERS RULE
cases. To avoid putting ideas on trial Warren wanted to judge only conduct, '6 6
and so he distinguished between a defendant who was "engaged in the business
of purveying" or "engaged in the commercial exploitation of the morbid and
shameful craving for [these] materials, ' 2 67 and a defendant who simply read
the materials in the privacy of his home. 6 The Court never accepted Warren's
reasoning directly, but it seems to have followed it in holding that the power
of the United States to ban obscene materials from the mails derives from the
2 69
fact that they may be sold, not from the mere fact of their being obscene.
The business papers rule is doctrinally part of the fourth amendment
and finds analogues in several doctrines within the amendment. The article will
first examine three doctrines which govern the amount of privacy afforded to
certain entities and documents: the rights of corporations, documents required
by the government to be maintained, and documents to which differing expectations of privacy attach. It will then examine less strict procedures for obtaining
documents covered by the fourth amendment: administrative summonses,
administrative search warrants, and an intermingled documents rule.
The Supreme Court's unwillingness to extend full fourth amendment rights
to corporations has important implications for the privacy which business papers
in general can expect under the Constitution. The question whether a corporation has fourth amendment rights was decided before it was decided. Early on,
in a summary statement by Chief Justice Waite before argument in Santa Clara
County v. Southern PacificRailroad,'70 the Court held that corporations were
persons for the purposes of the fourteenth amendment. This was apparently
based on opinions delivered on circuit by Justice Field which held that to deprive
corporations of certain rights (notably property rights, which is how the fourth
amendment was viewed) would deprive their natural-person owners of those
rights.27 ' The result of making corporations persons was that they had full fourth
amendment rights, a conclusion drawn at the beginning of this century in Hale
27
v. Henkel."
"'Kingsley Books, Inc. v. Brown, 354 U.S. 436, 446 (1957) (Warren, C.J., dissenting).
"'Roth v. United States, 354 U.S. 476, 495-96 (1957) (Warren, C.J., concurring in the result).
"'Stanley v. Georgia, 394 U.S. 557 (1969) (private possession of pornographic material may not be made
a crime in itself).
... United States v. Orito, 413 U.S. 139, 143 (1973).
"'118 U.S. 394 (1886).
Mr. Chief Justice Waite said: The court does not wish to hear argument on the question whether
the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny
to any person within its jurisdiction the equal protection of the laws, applies to these corporations.
We are all of the opinion that it does.
Id. at 396. See Minneapolis Ry. Co. v. Beckwith, 129 U.S. 26, 28 (1889). Santa Claragave "no history,
logic, or reason ... to support" its conclusion that the fourteenth amendment applies to corporations.
Wheeling Steel Corp. v. Glander, 337 U.S. 562, 577 (1949) (Douglas, J., dissenting).
27'County of San Mateo v. Southern Pacific R. Co., 18 F. 385, 402-03 (Cir. Ct. D. Calif. 1883) (Field,
Cir. J.). See generally O'Kelly, Jr., The ConstitutionalRights of CorporationsRevisited, 67 GEO. L.J.
1347, 1353-58 (1979). For this reason the fifth amendment, viewed as a personal right, was not extended
to corporations.
"1'Hale v. Henkel, 201 U.S. 43 (1906).
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This doctrine has been subjected to much thoughtful criticism. In Hale
itself the first Justice Harlan stated that "a corporation is 'an artificial being,
invisible, intangible and existing only in contemplation of law' [and so] cannot
claim the immunity given by the Fourth Amendment." 7 3 He felt that the Hale
rule destroyed the government's inherent visitorial power to examine corporate
records.2 7 More recently, Justices Black and Douglas have made essentially
the same points in questioning the appropriateness of granting fourteenth amendment rights to corporations. 27 In his discussion of the nature of the corporation in Bell v. Maryland,21 6 Douglas attacked the whole idea of a corporate
"person" having personal rights, especially personal privacy rights. 277 "The
property involved is not, however, a man's home . . .' 278. Private property is
involved, but it is property that is serving the public.
The Supreme Court has recognized for years that corporations are not
simply private entities entitled to private rights like natural persons, and
while the Court has supported the corporation's fourth amendment rights
it has given it only "limited application [to] compulsory production of corporate documents and papers. ' ' 27 9 United States v. Morton Salt Co. 2 1 ° emphasized the privileges received by a corporation, to act as an artificial entity and
to engage in interstate commerce, and the consequent power of the government to burden those privileges with duties.28 1 The idea of a reciprocity of powers
and privileges has been reiterated in various contexts since then. 82
The Morton Salt rationale was echoed in Justice Rehnquist's dissent 2in
83
a recent first amendment case, First National Bank of Boston v. Bellotti.
Rehnquist suggested that newspaper corporations in a sense have a property
right in full first amendment rights because they are necessary to a newspaper,
but that, since those rights are not so necessary to a bank, the bank would
not have them or at least not to the extent. 8 4 Under this theory, a corpora"'Id. at 78 (Harlan, J., concurring).
."Id. at 78-79. Harlan reiterated this regulation theory later that year in sustaining state regulation of
life insurance companies against a fourteenth amendment due process attack. See Northwestern Life Ins.
Co. v. Riggs, 203 U.S. 243, 253-54 (1906).
"'Wheeling Steel, 337 U.S. at 577-79 (Douglas and Black, JJ., dissenting); Connecticut General Life Ins.
Co. v. Johnson, 303 U.S. 77, 86, 90 (1938) (Black J., dissenting).
276378 U.S. 226 (1964).
"Id. at 262-63, 265-66 (Opinion of Douglas, J.).
at 252 (Opinion of Douglas, J.).
2"Essgee v. United States, 262 U.S. 151, 158 (1923).
280388 U.S. 632 (1950).
2"Id.
21'Morton Salt, 388 U.S. at 652.
21'Thom v. New York Stock Exchange, 306 F. Supp. 1002 (S.D.N.Y. 1969), aff'd, 425 F.2d 1074 (2d
Cir.), cert. denied, 398 U.S. 905 (1970) (Stock Exchange is a "business affected with the public interest");
Steele. v. State ex rel. Gorton, 85 Wash.2d 585, 537 P.2d 782, 787 (1975). And earlier, see Note, The
Fourth and Fifth Amendments and the Visitorial Power of Congress over State Corporations,30 COLUM.
L. REV. 103, 107-08 (1930).
83435 U.S. 765 (1978).
"'Id. at 824-25 (Rehnquist, J., dissenting). The Court posed the degrees of privacy issue in a footnote,
but then failed to answer it. Id. at 778 n.14.
Fall, 1982]
BUSINESS PAPERS RULE
tion has fourth amendment rights, not inherently as a person as is now the law,"85
but only to the extent necessary to protect its property. The restraint on government action then would be, for corporate documents, not privacy but whether
the requests are excessive or burdensome. This standard was suggested for subpoenas in Morton Salt,", and it would give needed flexibility in obtaining search
warrants for business papers.
It is well established that if the government has the power to require the
maintenance of certain records, it can obtain access to them fairly easily because
such records become public or quasi-public instead of personal." 7
The principle applies not only to public documents in public offices, but
also to records required by law to be kept in order that there may be suitable
information of transactions which are the appropriate subjects of governmental regulation and the enforcement of restrictions validly established.
There the privilege, which exists as to private papers, cannot be
maintained."'
Wilson,2 I in fact, suggested that under Hale v. Henkel 9 all corporate records
have this public quality. 29 ' The issue is to what extent the Wilson suggestion
can be expanded beyond corporations.
Wilson was reaffirmed in the minimum wage case, 92 and was again relied
upon in Davis v. United States,293 which held that gasoline rationing coupons
and other records relating to amounts of gasoline sold were government property.
Three years later the Court enunciated a broad standard in Shapiro v. United
States.294 "[Tihere are limits which the Government cannot constitutionally
2
'Justice Rehnquist emphasized the troubled history of corporate rights and quoted Chief Justice Marshall's
famous statement in Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 536 (1819) that "[a]
corporation is an artificial being, invisible, intangible, and existing only in contemplation of law." First
National Bank of Boston, 435 U.S. at 823.
" 86Morton Salt, 338 U.S. at 252-54. Morton Salt dealt with subpoenas, of course, so to the extent that
a warrant is more disruptive the burdensome test would be correspondingly adjusted.
"' Wilson, 221 U.S. at 381. Discussion here concerns only access. A common technique of white collar
crime enforcement is prosecution for failure to keep records pursuant to 26 U.S.C. § 6001 (1976 & Supp.
IV 1980). See Matthews & Sullivan, Criminal Liability for Violations of the Federal Securities Laws: The
National Commission's Proposed Federal Criminal Code, S. I and S. 1400, 11 AM. CRIM. L. REV.883.
906-07 (1973).
2
'Wilson, 221 U.S. at 380.
2 221 U.S. 361 (1911).
9202 U.S. 43 (1906).
29
'Id. at 382-83.
The Wilson rule was reaffirmed in the minimum wage case, United States v. Darby, 312 U.S. 100, 125
(1941).
29 3
Davis v. United States, 328 U.S. 582 (1946) (gasoline rationing laws). This decision was preceded by
the denial of certiorari in a case involving OPA rules which emphasized the "quasi-public" nature of
such records, see Bowles v. Glick Bros. Lumber Co., 146 F.2d 466, 571 (9th Cir.), cert. denied, 325 U.S.
877 (1945). The public records doctrine was followed, see Hughes v. Johnson, 305 F.2d 67, 69 (9th Cir.
1962) (records and contraband games birds subject to search without warrant). See also In Re Grand Jury
Subpoena to Custodian of Records, 497 F.2d 218 (6th Cir.) (availability of escrow records required to
be kept by state law), cert. denied, 419 U.S. 1009 (1974).
294335 U.S. 1 (1948).
292
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exceed in requiring the keeping of records" for inspection, but it has not
overstepped them if there is "a sufficient relation between the activity sought
to be regulated and the public concern so that the Government can constitutionally regulate or forbid the basic activity .... "295 Clearly, this standard refers
almost exclusively to business and commercial activities, the areas in which the
29 6
government has the greatest regulatory interest.
It was only natural, then, that limitation of the Wilson-Davis-Shapirodoctrine came in two personal income tax cases, Marchettiv. United States29 and
Grosso v. United States,29 8 both involving wagering income. The Court found
that records of personal income from illegal gambling are essentially private
and that Shapiro and the other required records cases were inapposite.2 99 Grosso
modified Shapiro to apply only where: (1) the inquiry was "essentially
regulatory;" (2) the documents would be customarily regained; and (3) the
"records themselves ... assumed 'public aspects' which rendered them at least
analogous to public documents." 3 ' For the purposes of the business papers
rules, Grosso establishes a constitutional difference between business and private
papers that permits easier access to, and only to, business papers.
It is clear that the existence of a business is not a talisman which deactivates the fourth amendment, 3"' but it is equally clear that the fourth amendment applies differently to businesses. The Davis case strongly suggested that
the place where the records were kept played a large part in the validity of
that search,3"2 because "the search was of the office adjacent to the pumps
- the place where petitioner transacted his business ... . And the demand
was made during business hours." 3 3 In constitutional doctrine, a place of
business has a lower expectation of privacy.
The Supreme Court has consistently held that the home is the principal
object of fourth amendment protection. ' This protection disappears, however,
when the home is turned into a business. In Lewis v. United States, 3°5 the Court
1'Id. at 32.
"'Compare the equal protection cases using minimum scrutiny in economic regulation cases, e.g., Williamson
v. Lee Optical Co., 348 U.S. 483, 488 (1955); West Coast Hotel Co. v. Parrish, 300 U.S. 379, 393 (1937);
Nebbia v. New York, 291 U.S. 502, 531 (1934). See also United States v. Carolene Products Co., 304
U.S. 144, 152-53 & n.4 (1938) (Justice Stone's celebrated footnote suggesting heightened scrutiny for political,
as opposed to economic, rights).
'390 U.S. 39 (1968).
"'390 U.S. 62 (1968).
... Grosso, 390 U.S. at 68; Marchetti, 390 U.S. at 55-57. Thus, prosecutions on the basis of failure to
report illegal income or failure to pay taxes on illegal income violate the fifth amendment, when reporting
or paying is tantamount to confession. Grosso, 390 U.S. at 69; Marchetti, 390 U.S. at 54.
"'Grosso, 390 U.S. at 67-68.
"'See, e.g., See v. City of Seattle, 387 U.S. at 543.
"'Davis, 328 U.S. at 593. Justice Frankfurter specifically took issue with this assertion. Id. at 596
(Frankfurter, J., dissenting).
"..Davis, 328 U.S. at 592.
"°'United States v. Martinez-Fuerte, 428 U.S. 543, 561 (1976); United States v. United States District Court,
407 U.S. 297, 313 (1972).
"'385 U.S. 206 (1966).
Fall, 1982]
BUSINESS PAPERS RULE
dealt with a decoy buyer of drugs who went into the defendant's house to
purchase narcotics.
Without question, the home is accorded the full range of Fourth Amendment protections .... But when, as here, the home is converted into a
commercial center to which outsiders are invited for purposes of transacting unlawful business, that business is entitled to no greater sanctity
than if it were carried on in a store, a garage, a car, or on the street.3"6
Justices Brennan and Fortas concurred, "solely on the reasoning on which the
Court ultimately relies, namely that petitioner's apartment was not an area protected by the Fourth Amendment as related to the transactions in the present
case." 30 7 Consistent with this distinction, later cases have limited this business
exception to extend to the actual doing of business, not to a general search
of the home.30 0 The characteristic of a business to "[hold] itself open to the
public" generally for the transaction of business undeniably lessens the privacy
which can be expected to surround such transactions. 0 9 "[A] business, by its
special nature and voluntary existence, may open itslf to intrusions that would
not be permissible in a purely private context." 3t 0 And surely records of such
transactions can claim no greater secrecy.
This sort of reasoning is followed in two other business doctrines. In United
States v. Turner3'I the court found that the "intermingling of the defendants'
private lives and their narcotics activities" made electronic interception of private
conversations inevitable and unobjectionable.I 2 And the first amendment right
of access cases, beginning with Marsh v. Alabama,"3 hold that the creation
of a business district to which the public is generally invited limits the owner's
right to exclude people.31
1°1Id. at 211.
"'Id. at 212-14 (Brennan, J., concurring). See also The Supreme Court, 1966 Term, 81 HARV. L. REV.
69, 192-93 (1967). The commentary suggests that since the broader informant rationale of Hoffa v. United
States, 385 U.S. at 392 (Hoffa discussed jury tampering with a person who has a government informer),
covers Lewis, the business language is not controlling.
"'Lewis, 385 U.S. at 211, 213. See Lo-Ji Sales, Inc. v. New York, 442 U.S. 319, 329 (1979); United States
v. Phillips, 497 F.2d 1131, 1134-35 (9th Cir. 1.974); United States v. Hutchison, 488 F.2d 484, 487 (8th
Cir. 1973). See also Vonder Ahe v. Howland, 508 F.2d 364, 369-70 (9th Cir. 1974) (no probable cause
existed for a search of a house generally where the defendant dentist's office was located in one part of
the house, even though two sets of records were suspected).
'"Northside Realty Assocs., Inc. v. United States, 605 F.2d 1348, 1355 (5th Cir. 1979).
"G.M. Leasing Corp v. United States, 429 U.S. 338, 353 (1977).
'528 F.2d 143 (9th Cir.), cert. denied sub nom. Grimes v. United States, 423 U.S. 996 (1975).
"'528 F.2d at 159-60 (citing Justice Brennan's concurrence in Lewis, 385 U.S. at 213).
"'326 U.S. 501 (1946).
"'Marsh, 326 U.S. at 503 ("the town and its shopping district are accessible to and freely used by the
public in general"); Food Employees Local 590 v. Logan Valley Plaza, Inc., 391 U.S. 308, 318 (1968)
("The general public has unrestricted access to the mall property. [It] is clearly the functional equivalent
of the business district of Chickasaw involved in Marsh."). The widest reading of Marsh has been
considerably trimmed, however. In Logan Valley, the Court held that employees of the warehouse of a
company which had a store in the mall had a right to picket the mall. In Lloyd Corp. v. Tanner, 407
U.S. 551 (1972), it was held that political handbilling was not so permitted, emphasizing that a company
town must literally exist for Marsh to apply. Logan Valley was overruled on this basis in Hudgens v. NLRB,
424 U.S. 507, 518 (1976).
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While invitation theories reduce expectations of privacy in business places,
the absence of "personhood" in business records also reduces expectations of
privacy in them. It is only in fifth amendment doctrine, however, that doctrine
has concentrated (at times) on the content of the subject papers." 5 James
McKenna has recommended a "hierarchical Fourth Amendment" based
primarily on content. 16 While his claim that such a rule had been implicitly
adopted by the Supreme Court has been seriously undercut by subsequent
developments,3 17 his arguments in support of such a system are strong. He relies
on the fourth amendment's primary purpose of protecting private papers, noting
the personal nature of such papers, the highly intrusive nature of a search through
'
them, and the fifth and first amendment values implicated by such papers.3 8
The McKenna article effectively demonstrates, as has been argued here, that
a content-based rule would be appropriate to fourth amendment concerns
and that a business papers rule would be consistent with the amendment
in attaching constitutional significance to the difference between personal and
business activities.
The most common procedures for obtaining information in a white collar
crime investigation are administrative summonses or grand jury subpoenas.
Searches have been discussed in this article because, being more intrusive, they
represent the area where privacy concerns are most clearly implicated. Compulsory process is mentioned very briefly here to suggest ways that a broad
31 9
standard might be drawn within the constitutional framework.
The power to summon and inspect derives from the regulatory power,320
and in those situations it extends to relevant records,3 2 ' and "the Fourth, if
applicable, at most guards against abuse only by way of too much indefiniteness
or breadth in the things required to be 'particularly described,' if also the inquiry is one the demanding agency is authorized by law to make and the materials
specified are relevant." 32 2 The probable cause standard is satisfied by relevance
standard of
to a power within Congressional authority,3 23 and the3 particularity
2
the summons so authorized is virtually nonexistent. 1
"'See supra text accompanying notes 102-13.
"'McKenna, supra note 81.
"'See Note, supra note 152, at 979. See, e.g., Blank, 549 F.2d at 386-87. A contrary claim is forcefully
made, McKenna, supra note 81, at 72, but this argument is seriously undercut by the Supreme Court,
Zurcher v. Stanford Daily, 436 U.S. 547 (1978). Judge Friendly described the fourth amendment as limiting
the object of the search, not for the purpose of suppressing relevant evidence, but for limiting the search
itself. United States v. Bennett, 409 F.2d 888, 897 (2d Cir. 1969).
"'McKenna, supra note 81, at 68-72. McKenna goes on to recommend extra procedural safeguards for
private papers. Id. at 72-91.
"19An overview of the law in this area can be found in Wilson & Matz, supra note 2, at 653-90 (administrative
summons and grand jury subpoena).
"'1ICC v. Brimson, 154 U.S. 447, 486 (1894).
"'Oklahoma Press, 327 U.S. at 204; Wilson, 221 U.S. at 383; Hale v. Henkel, 201 U.S. at 77.
"'Oklahoma Press, 327 U.S. at 208.
1"'1d. at 309. See Morton Salt, 338 U.S. at 652-54.
"2'Morton Salt, 338 U.S. at 651-52.
Fall, 19821
BUSINESS PAPERS RULE
Summonses have been more closely scrutinized in personal tax cases, where
the I.R.S. must show that: the investigation is pursuant to a legitimate purpose; the inquiry is relevant to that purpose; the information sought is not already
possessed by the I.R.S.; and the administrative procedures of the I.R.S. have
been followed.3 25 The standard is still basically relevance, with some protection from the administrative procedure. Here again a distinction is made between
business and private papers, with the latter receiving more protection.
Returning to search warrants, there is strong fourth amendment precedent for the kind of relaxed-standards warrant used in the business papers
rule. Administrative search warrants were approved by the Supreme Court
327
in Camarav. Municipal Court32 6 and See v. City of Seattle as an alternative
21 Camara and See involved
to requiring no warrant at all in such situations.
warrantless routine inspections of (respectively) houses and businesses. The problem with these inspections was the total discretion accorded the inspectors,
29
but the realities of the situation demanded routine inspections. The Court's
compromise was that a warrant can issue where there are administrativereasons
for suspecting a particular dwelling.330 The administrative procedures are
intended to curb discretion, but the examples of administrative criteria given
in Camara,e.g., the age of a building or the neighborhood in which it stands,
were still extremely broad with respect to the amount of intrusion into the particular building which was searched.3 '
Subsequent cases have not been clear or consistent in their results or
rationales. 32 Nevertheless, governmental need to inspect seems central to all
of them. The need issue has been discussed before, and it was concluded that
while it is irrelevant to privacy per se, it is highly relevant to the development
3 34
of an overall policy.333 United States v. Martinez-Fuerte emphasized that
individual stops on major roads would be impractical if a reasonable suspicion
"'United States v. Powell, 379 U.S. 48, 54-58 (1964). For a thorough discussion, see Wilson & Matz,
supra note 2, at 655-58.
32387 U.S. 523 (1967).
3"387 U.S. 541 (1967).
"'This approach had been taken earlier in Frank v. Maryland, 359 U.S. 360 (1959) (which was overruled
by Camara, 387 U.S. at 534).
"'Camara, 387 U.S. at 532, 535-37.
" Camara, 387 U.S. at 358. This has been called probable cause in gross, as opposed to probable cause
in particular. Note, Administrative Searches and the FourthAmendment: An Alternative to the Warrant
Requirement, 64 CORNELL L. REV. 856, 861 (1979).
"'Camara, 387 U.S. at 538. Substituting procedure for a standard in these cases is strongly advocated
by the Note, supra note 330, at 871-73.
"'United States v. Martinez-Fuerte, 428 U.S. 543 (1976) (no warrant required at a checkpoint on a major
highway, sixty miles from the Mexican border, at which all cars are stopped); South Dakota v. Opperman,
428 U.S. 364 (1976) (routine inventory search of car including glove compartment impounded for multiple
parking violations permitted without warrant); Almeida-Sanchez v. United States, 413 U.S. 226 (1973)
(individual searches near the border require a warrant); Wyman v. James, 400 U.S. 309 (1971) (no warrant
required for caseworker to visit home of AFDC recipient).
"'See supra text following note 106.
"1'428 U.S. 543 (1976).
[Vol. 16:2
AKRON LAW REVIEW
were required in each case. 3" Wyman v. James'
6
said that the home visit is
at the center of the AFDC program and that the rehabilitative aspects of the
program require close supervision.33 7 The premise that need is relevant comes
from Camara itself, where the Court justified its new type of warrant in large
part on the fact that administrative inspections are the only effective means
of policing the housing code.338
Need, however, is not a criterion well suited to judicial determination, nor
is it a self-limiting rationale.339 Its boundaries are indistinct, leaving wide discretion in the hands of those who must decide what is needed, often the inspectors themselves.3"' But even this rationale has resulted in a distinction between
homes and businesses. The Court in See conceded that, while businesses have
the same rights as individuals in this area, there are more situations in which
a business may be inspected than a home."" The Court specifically analogized
the business records cases in establishing the application of the fourth amend-
ment to these situations.
2
In 1977 the Sixth Circuit found that See applied to required records. The
search might be unannounced and the probable cause less strict, but some
limiting warrant was needed.34 3 And in 1978 the Supreme Court reaffirmed this
policy in Marshall v. Barlow's, Inc.3""
Probable cause in the criminal sense is not required. For purposes of an
administrative search such as this, probable cause justifying the issuance
of a warrant may be based not only on a specific evidence of an existing
violation but also on a showing that "reasonable legislative or administrative standards for conducting an ... inspection are satisfied with respect
to a particular [establishment]." Camara."'
... Martinez-Fuerte,428 U.S. at 557. Justice Brennan took issue with this as a factual matter, pointing
out that an overloaded station wagon, for example, would provide an articulable reason to stop. Id. at
575 (Brennan, J., dissenting). See also Note, Administrative Searches and the FourthAmendment's Warrant
Requirements, 32 ARK. L. REV. 755, 770-71 (1979) (questioning the competence of judges to answer
"empirical questions" like need).
336400 U.S. 309 (1971).
"'Wyman, 400 U.S. at 319-20.
"'Camara, 387 U.S. at 537. See also Note, supra note 330, at 856-57.
"'See Comment, supra note 98, at 306-07.
"'Compare Powell, 379 U.S. at 58 (Commissioner of Internal Revenue determined a necessity).
"'See v. City of Seattle, 387 U.S. at 543, 545-46. Indeed, the Court has held that See does not apply and
no warrant is needed at all in closely regulated businesses, like liquor, Colonnade Corp. v. United States,
397 U.S. 72, 76 (1970) (See not applicable where Congress has broad powers "of inspection under the
liquor law"), Peeples v. United States, 341 F.2d 60, 64 (5th Cir. 1965) (same rationale as Colonnade where
business is operated, illegally, out of a home), and firearms, United States v. Biswell, 406 U.S. 311, 316
(1972) (warrant would frustrate the necessary surprise element).
"'See v. City of Seattle, 387 U.S. at 544-45 (citing Morton Salt, Oklahoma Press, and Hale v. Henkel).
"'United States v. Consolidation Coal Co., 560 F.2d 214 (6th Cir. 1977). See also Almeida-Sanchez, 413
U.S. at 271 (Colonnade and Biswell do not apply to Border Patrol searches of individual cars not at
checkpoints).
3"436 U.S. 307, 313 (1978).
'"'Id. at 320.
Fall, 19821
BUSINESS PAPERS RULE
This is the standard for the proposed business papers warrant. The approved
procedures would be sound intelligence procedures followed by people familiar
with white collar crime enforcement.3 ,6 While the probable cause and specificity
standards would not be rigorous, the warrant would have some basis and the
very fact of having to go through a process is its own protection." '
The courts have not been entirely sympathetic to the problem of intermingled documents. An early Supreme Court case dismissed the problem of
8
irrelevant entries in business records as inevitable in the nature of such records."
More recently, in the context of wiretapping, the Court stated, "the interception of private conversation which occurred in this case was the inevitable consequence of the decision of the appellants to intermingle their private lives and
their narcotics activities." 3 '9 The Court has also applied the plain view doctrine to items in the same file or book as those which the original warrant
specifies."' However, in the case of personal safe deposit boxes, the Second
Circuit in United States v. FirstNationalCity Bank' held that a search warrant, not overbroad in designating (essentially) "seizable assets," was too broad
352
for the purpose of going through private papers to find the assets. The Court
353
recommended a procedure like the Model Code. The Supreme Court indirectly
recognized the validity of this view in Nixon v. Administrator of General
Services.35 There the Court held that the intermingling of personal papers with
presidential papers was not a bar to placement in the National Archives because,
among other things, government archivists, who have an excellent reputation
for confidentiality, could sort out the private papers.3 5'
It may be concluded that the business papers rule, while not a reflection
of current constitutional doctrine, is not antithetical in any of its major
characteristics with constitutional privacy policies. Indeed, much doctrine points
in the direction of the rule, and the doctrines' goals would be aided by the
rule's implementation.
VI. CONCLUSION: THE STABILITY OF THE BUSINESS PAPERS RULE
The business papers rule was developed in response to the serious increase
in white collar crime and to a growing insensitivity in the courts to privacy
interests. Those concerns pull in different directions and the business papers
"'Compare Note, supra note 330, at 871.
"'Weinreb, Generalities of the Fourth Amendment, 42 U. CHI. L. REV. 47,72(1974). Seealso McKenna,
supra note 81, at 80-81.
"'First National Bank of Mobile, 295 F. at 143.
"'United States v. Turner, 528 F.2d 143, 159-60 (9th Cir. 1975).
"'Beusch, 596 F.2d at 877 (violations of currency reporting regulations of the Bank Secrecy Act).
'568 F.2d 853 (2d Cir. 1977).
"'Id. at 860-61 (Gurfein, J., concurring and dissenting).
"'Id. at 861 n.3.
3 '433 U.S. 425 (1977).
3"Id. at 462.
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[Vol. 16:2
rule is the result of attempting to reconcile the need for privacy with the need
to have more effective prosecution of white collar crime.
Looking at the problem from a constitutional perspective, one is faced
with the choice of having a flexible warrant standard which applies in all cases
or having a rigid warrant standard which applies only in some cases.3 5 6 At present, both systems exist. For administrative searches, a weak warrant is required
in most cases, but no warrant is required in others. In criminal searches, a broad
warrant is permitted in some cases and no warrant is required in others. It is
apparent that privacy rules based on a unitary reasonable expectations of privacy
standard have eroded a great distance from Katz v. United States3 7 where the
expectations test was developed to expand constitutionally protected privacy
beyond mere place.3 58 It is therefore the central goal of the business papers
rule to be a stable rule which, while it aids law enforcement, will securely protect the privacy of individual citizens.
The formal reasons for the rule's stability are the criteria which it employs.
"Reasonable expectation of privacy" was intended to be a clear standard, but
it turned out to be subject to very different interpretations, not only among
and within courts, but between the courts and the Congress. 59 The business
papers rule, on the other hand, looks to the fact of doing business or actively
engaging in commerce. This criterion depends on external facts rather than
on "expectations." The business papers distinction is a tested one: the existence
of a business vel non has been an important issue in tax matters and in the
fourth amendment itself. Depending on objective fact is more stable also than
tests which are based on the raw subjective concept of privacy. The tests devised
by Justices Marshall and Brennan and by Mr. McKenna are in themselves objective, but their foundation and later application depends to a great extent
on the personal beliefs of the test's author.
The more important reason to expect stability is the substantive one. As
a policy the business papers rule tries to take account of both competing goals.
Law enforcement's need to proceed without having developed probable cause
or particularized suspicions is recognized and given expression. At the same
time the rule protects private documents.
While the overall effect of the business papers rule is to concentrate on
the type of document, this effect is accomplished by having two procedural
standards. The privileged area is small, so that very little evidence is ultimately
unobtainable, and that evidence - diaries, letters, or the like - unless it contains an outright confession will be of relatively little use in fighting economic
"'In
the administrative search field, Camara, 387 U.S. at 523, chose the former scheme as a better protection
than the latter scheme, which had been established in Frank.
'389 U.S. 347 (1967).
"'See also Mancusi v. DeForte, 392 U.S. at 368.
"'The bank records cases and their subsequent overruling by Congress, see supra text accompanying notes
119-41, surely point to the extent to which people can differ on such expectations.
Fall, 19821
BUSINESS PAPERS RULE
crime. Instead of a privilege, the protection is provided by a higher standard
of probable cause and specificity. This not only has the traditional fourth amendment effect of limiting police discretion by limiting the occasions on which and
the scope with which they may search through private papers, it also interlocks
with the lower standard areas which provide the information needed to limit
these intrusions. The low standard complements the high, and makes the high
standard stable by making it easier for law enforcement to live with it.
The best guarantee of stability is acceptance by all interests. It is hoped
that law enforcement would be satisfied that the easy-access area will provide
the way into the difficult-access area where appropriate, and that very little
relevant information is ultimately barred. It is hoped that private citizens, too,
would be satisfied that their private affairs will not be examined except where
there is good cause for it, in the most limited possible fashion, and that the
most private matters will be kept private. The business papers rule attempts
to set out a general privacy policy with respect to law enforcement efforts against
white collar crime. To the extent that it is able to recognize and satisfy the
competing interests involved, it will not be subject to the kind of destructive
further balancing which has afflicted current privacy doctrines.